Some of these expenses may be incurred by you, as follows:
1. Mortgage Insurance: If you have less than 25% of the purchase price available as a down payment you will have a high ratio mortgage. Federal legislation requires that all Banks, Trust companies and Credit Unions have mortgage insurance on loans exceeding 75% of value. The premium charged varies depending on the amount borrowed but it is usually added on to the amount borrowed under your mortgage.
2. Mortgage Appraisal: Most lenders require an appraisal of the property to confirm that the price paid is reasonable. This is done by a professional property appraiser and the fee normally between $125 to $250 may be added to the mortgage, depending on the lender.
3. Property Survey: A survey may be required by the lender to identify the boundaries of the property and the location of the home. This requirement may be waived if the property is relatively new (under 25 years) or an existing property survey is available.
Rural properties or acreage generally require a survey, if no recent survey is available. The cost can vary anywhere from $300 and above. Surveys are not required for strata properties.
4. Legal Fees: Your Solicitor or Notary will require to be paid for their services. All financial institutions have a Solicitor who will prepare the mortgage, title deeds, statement of adjustments etc. and attend to registration. These institutions generally have negotiated a flat fee, typically $250 to $300 for the Solicitors time and with the costs of registration you can expect the total cost to be in the $550 to $800 range. If you have your own Solicitor review the documentation, their fees will be in addition to this.
5. Property Transfer Tax (PTT): This is by far the largest fee you will incur, that the PTT is calculated at a rate of 1% on the first $200,000 and 2% on the balance of the purchase price, if you are not a first time home buyer. There is an exemption for first time home buyers, that the property is intent for a primary place of residence, with a purchase price up to $425,000. The home has to be your primary residence, not an investment property or others, although you are a first time home buyer who may be qualify for the exemption. Your Solicitor will be able to advise you on this exemption or refer you to the Province of British Columbia website.
6. Fire Insurance: All lenders require full replacement cost insurance covering fire and storm damage.
7. Property Inspection: Unless your home is new, it is strongly recommended that you have an inspection completed by a qualified inspector. The cost ranges from $300-$500, yet it could potentially save you thousands of dollars in the long term for extensive repairs.
8. Other Amounts: On the adjustment date you will be responsible for you proportionate share of property taxes, utilities, maintenance fees (if strata), etc.
Previous Provincial Sales Tax (PST) Replaces Current HST: The Harmonized Sales Tax (HST) is being replaced by the previous PST in B.C.. As one of the advantages, the threshold limit of tax payable of a newly constructed of home raises from $450,000 to $850,000 with the reintroduction of the PST in effect. Therefore, with replacement by the previous PST, effective April 1, 2012, the tax is payable only on the purchase of newly constructed homes above a market value of $850,000, instead of $450,000 (with the current HST), and a maximum rebate or provincial grant of $42,500 with the PST in effect.
No PST is required to be paid, if you are purchasing a pre-owned or non-new property at any purchase prices.
The BC Ministry of Finance has updated their PST (HST) in BC website: http://www.pstinbc.ca/buying_goods/buying_a_home for the new PST/HST transition rules for housing during the return to the PST on April 1, 2013 with some of the key elements, as such: The B.C. new housing rebate threshold will be increased to $850,000, effective April 1, 2012 with a maximum rebate of $42,500.
Some of the key elements include:
- A provincial grant of up to $42,500 will be available for purchasers of new secondary vacation or recreational homes outside the Greater Vancouver and Capital regional districts priced up to $850,000, effective April 1, 2012.
- For newly built homes where construction begins before April 1, 2013, but ownership and possession occur after, purchasers will not pay the seven per cent provincial portion of the HST. Instead, purchasers will pay a temporary, transitional provincial tax of two per cent on the full house price.
- The temporary housing transition measures will be in place for two years, until March 31, 2015. The tax only applies to homes where construction begins before the transition date and ownership and possession occur after.
- In the case of a sale of real property, tax generally becomes payable on the earlier of the day on which ownership is transferred to the recipient and the day on which possession of the property is transferred to the recipient under the agreement of purchase and sale. However, where the property supplied is a residential condominium unit in a condominium complex which has not, at the time possession is transferred, been registered as a condominium, tax is not payable until ownership of the unit is transferred or, if earlier, 60 days following the date of registration. This new tax rule has been updated by The Canadian Ministry of Finance for the HST/PST trasition. There are several examples listed in the rules, which can be found here: http://www.fin.gc.ca/n12/data/12-017_1-eng.asp