Those Unfortunate Closing Costs

Remember, it’s all too easy to look at your account statement and see your available cash. However, you need to remember that all of your cash savings cannot be used just for your down payment.  There are last-minute costs such as taxes, legal fees, appraisal fees, moving expenses and house insurance to pay before you and the family are finally in your new home.

The time to budget for those end expenses is NOW.  You must be prepared to pay most, and perhaps all, of the following closing costs.

You may want to ask. Which of the following may apply to you?

Property Purchase Tax

The British Columbia Provincial Government imposes a property purchase tax, which must be paid before any property can be legally transferred to a new owner.  The tax is 1% on the first $200,000 of the property value and 2% on any value over $200,000.  Ask us about the special regulations for first time buyers in B.C.

Goods & Services Tax

12% HST will now be applied to all new homes or substantially renovated homes.

Property Tax

If the current owners have already paid the full year’s property taxes to the municipality, you will have to reimburse them for your share of the years taxes.  Property taxes are calculated from Jan - Dec and are paid at the end of June. This will show up on your Statement of Adjustment as either a Credit or Debit from the Lawyer.

Appraisal Fee

When the lending institution requires an appraisal of the property before approving your loan, it may be your responsibility to pay the appraisers fee.

Survey Fee

The lending institution may also require that a survey certificate be presented to them.  The purpose of the survey is to formally establish the boundaries of the property and to ensure that all buildings are within those boundaries.  If the current owner cannot provide a recent survey certificate, it will be your responsibility to pay the surveyors fee.

Mortgage Application Fee

Lending institutions may charge a mortgage application fee.  This application fee may vary between lending institutions.

Mortgage Default Insurance

This type of insurance is required on all mortgage loans in excess of 75% of the appraised property value.  Its purpose is to insure that the lender will not lose any money if you cannot make your mortgage payments and the value of your property is not sufficient to repay your mortgage debt.  The insurance premium is paid to the lender and ranges from 0.5% to 3.75% of the loan value; however, in most cases this premium is added to the loan amount, and paid for over the term of the loan.

Life & Disability Mortgage Insurance

At your option, you may purchase insurance that will ensure that your outstanding mortgage balance is paid if you die or become disabled.

Fire & Liability Insurance

The mortgage lender will insist that you purchase an insurance policy which guarantees that, in the event of fire, the lender will receive the balance owing on the mortgage loan before you receive any insurance proceeds.

Legal Fees

The transfer of property ownership from the seller to the buyer must be recorded in the Land Title Office in order to protect the new owners interests.  You will probably want to engage a lawyer or notary public to act on your behalf during the completion of your purchase.  The legal fees for this service will include payment of a registration fee.  If you are financing your purchase with a new mortgage loan, there will be a further fee to prepare and register the mortgage documents.

Do you need a list of legal counselors who specialize in real estate? Just Ask...

Other Last-Minute Costs

Don’t forget to set some money aside for: 

•Home inspection fees  

•Moving expenses, Service Hook-up Fees

•Possible deposits required by utility companies

•Household goods: kitchen appliances, garden equipment, garbage cans, tools, window coverings, etc.

•Redecorating or renovations