Mortgage Closing Costs:
Many house purchases can get off track because buyers didn't know they still had some things to take care of before closing. Obtaining home insurance providing all documentations to the lenders and making sure lawyers get all documents are just a few things that you might forget about if just dealing with your bank. Your mortgage broker plays a large role in your home purchase.
Typical Costs of Home Buying
People forget to budget for closing costs. Use 1.5% of the purchase price. That would work out to $3,000 on a $200,000 purchase price.
Land Transfer Tax
All buyers of property pay this once and new homes are exempt from this. Budget about 1% of the purchase price.
Legal Fees
Your lawyer will charge you on the closing date for registering the mortgage and for acting on the purchase. The fees can often be misunderstood so it's important to ask for the total costs including the disbursements. Budget approx. $1000 - $1500
GST
If you are buying a newly subdivided lot or a new home, GST will generally be charged on the full amount of the purchase. If you are building the home, the situation varies as some contractors include the GST, and others may refund partial GST to themselves or to the purchaser, so it is important to find out at the time you make your offer.
Home Inspection and Appraisal
These are fees to make sure the house is in fine mechanical and physical condition. The appraisal is to assure you and the bank that the price you have decided to pay for the home is in line with neighbourhood market values. Budget approx. $500
Interest Adjustment
This is the interest you will pay for receiving your mortgage money before the official start of your mortgage
Property Tax Adjustment
Generally, property taxes for the calendar year are paid at the beginning of July for the full calendar year.
If you purchase a property before July 1st, the seller will be paying you for the days they owned a home from January 1st to completion day. You then are responsible for the entire amount to be paid to the municipality on July 1st. If you purchase a property after July 1st you will pay the seller for the days you own the property from completion day to December 31st, as they will already have paid the entire amount to the municipality on July 1st.
Strata Cost Adjustments
For those purchasing a strata property, the adjustment works similar to the property tax adjustment. The difference is that strata fees are paid monthly not annually, so the adjustment will be based on the number of days in your completion month that you have ownership. A Form A Certificate is required only on strata purchases and is issued by the strata corporation in order to confirm that the seller does not owe the strata corporation any money.
This information is being provided to assist in the planning of a home purchase. It is not intended to be legal advice and the information set out may not be applicable in all cases. In some situations, a purchaser may be required to pay for other additional expenses such as a second mortgage, an assignment of rents, power of attorney, or independent legal advice.
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