There is nothing WORSE than when you are going to see your lawyer to finalize your mortgage and home purchase and you find out that you’re $3000.00 short on your closing costs. Don’t ask me how I know. This is where using a mortgage professional is so important. In today’s housing markent your mortgage professional is your go to source. We wear many hats, REALTOR, Broker, Lawyer and Insurance agent. The 2nd time I purchased a home, I wasn’t really in the financial services industry yet and I received horrific advice from my bank at the time. I was told that I only require 1.5% of the purchase price as my closing costs. Well they were closer to 2.75%… and in my case this was about an extra $2300.00 that I didn’t even have.

Today’s blog is brought to you by Eitan Pinsky from one of our BC office. Enjoy!

6 HOME PURCHASE CLOSING COSTS

When you purchase your home, there are 6 additional costs to account for. They include:

Home Fire and Flood Insurance
Title Insurance
Legal Fees
Adjustments
Land Transfer Tax
GST
Here’s an overview of what you can expect.

Home and Fire Insurance. Mortgage lenders will require a certificate of fire insurance to be in place by the time you take possession of your home. The amount required is generally at least the amount of the mortgage or the replacement cost of the home. This cost can vary on the property size and extras being insured, as well as the insurance company and the municipality. Home insurance can vary anywhere from $400 per year for condos to $2,000 for large homes.

Title Insurance. This is a one-time fee of about $150 and it protects you against any issues, defects or fraud on your title. Your lawyer or notary helps you purchase this.

Legal Fees. Thirdly, you are required to pay legal fees. Your lawyer or notary will charge you anywhere from $700 to $1,000 to help with your purchase. There are also fees to register your title with the municipalities. All told, you’re looking at around $1,000 to 1,300, after tax.

Adjustments. An adjustment is a cost to you to pay the seller back for prepaying any property tax or condo fees on your behalf. Simply put, if you take possession in the middle of a month, the seller has already paid for the whole month and you must pay the seller back for what they’re not using.

Land transfer tax. Land transfer tax, or property transfer tax (PTT) as it’s known as in British Columbia, is a fee that is charged to you by the province. First-time home buyers are exempt from this fee if they are purchasing a property under $500,000. All home buyers are exempt if they are purchasing a new property under $750,000.

In British Columbia, the PTT is 1% on the first $200,000 of purchase and 2% thereafter. However, if the property being purchased is over $2,000,000, then it is 3% on any value over $2,000,000.

GST. GST is only paid on new construction purchases. GST is 5% on the purchase price. However, there is a partial GST rebate on properties under $450,000.

Please don’t hesitate to contact a Dominion Lending Centres mortgage professional for your home financing and mortgage needs.

Eitan Pinsky