PETE COOLIO REAL ESTATE
THE CLOSING COSTS
It's pretty straight forward to count up your available cash when purchasing a home, but remember that all of the cash you have at hand might not be available for your down payment, because there are closing costs, too. There are taxes, legal fees, appraisal fees, moving expenses, and home insurance to consider before you are finally in your new home, and although all of these costs might not pertain to your situation, the tally can still blow your budget out of the water if you're caught unaware. 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, so leaving yourself with some breathing room will pay big dividends when it comes to enjoying the experience of buying a new property.
Property Transfer Tax - (Click here for more details)
The British Columbia Provincial Government imposes a property transfer tax, which must be paid before any home can be legally transferred to a new owner. Click here for more details, as there are many. This is a Land Transfer Tax paid by the buyer when the title is registered with the LTSA (Land Title & Survey Authority). Title Registration will occur on the Completion Date and it has to be completed before you get your keys.
Some buyers may be exempt from this tax. For further information, click the link in the above paragraph or visit the Property Transfer Tax Website at:
Goods & Services Tax – If you purchase a newly constructed home, you may be subject to GST on the purchase price. There may be some rebates available depending on the value of the home. For further information, contact the Canada Revenue Agency at www.cra-arc.gc.ca.
Generally speaking, GST is also applied to the Real Estate Broker’s commission. Generally speaking, it’s not deductible, but generally speaking, it might be included in the costs of selling a home in a Capital Gains scenario. “Generally Speaking”? Sorry… this is lawyer stuff, so you’ll most definitely be bringing it up with your lawyer.
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 year’s taxes. There's a simple formula for this, so you shouldn't have to expect any surprises. If not already paid, your tax bill will be coming due in the summer
months. As the taxes are available from BC Assessment, there should be no surprises here, either.
Appraisal Fee – When the lending institution requires an appraisal of the home before approving your loan, it may be your responsibility to pay the appraiser’s 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.
Note: Lending institutions may ask for either a building location survey, which establishes where a building is located on a property, or a monumental survey, which establishes the actual boundaries of a property. If the current owner cannot
provide a recent survey certificate, it will be your responsibility to pay the surveyor’s fee.
Mortgage Application Fee – Lending institutions may charge a mortgage application fee. This application fee may vary between lending institutions.
Independent Legal Advice - There are qualified professionals out there with the answers you need. Although your Realtor may have some of the answers, he or she is NOT permitted to give you legal advise. This must come from a legal professional. Do not rely upon a well-intentioned neighbour or friend to provide it to you. This guarantees that your needs will be met accurately and professionally, and that you will be able to rely upon the advise you've been given in the event of any legal issues which may arise in the future. Your Realtor will advise you to consult a legal professional where it is appropriate or necessary.
DON'T FORGET ABOUT THE INCIDENTAL COSTS
Mortgage Default Insurance – This type of insurance is required on most mortgage loans in excess of 75% of the appraised home value. Its purpose is to ensure that the lender will not lose any money if you cannot make your mortgage payments and the value of your home is not sufficient to repay your mortgage debt. The insurance premium is paid to the lender and in most cases, 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 which 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.
Real Estate & Transaction Related Legal Fees – The transfer of home ownership from the seller to the buyer must be recorded in the Land Title and Survey Authority Office in order to protect the new owner’s interests. You will probably want to engage a lawyer or notary public to act on your behalf during the completion of your purchase. The lawyer or notary public will charge a fee for this service, plus disbursements, including the Land Title Registration fee. If you are financing your purchase with a new mortgage loan, there will be a further fee and disbursements to
prepare and register the mortgage documents. We can refer you to qualified professionals to help you.
OTHER LAST MINUTE COSTS...
Also have money set aside for the following:
• home inspection fees: you must pay your home-inspector after the home inspection. Just like a visit from the pizza guy, this is an external part of the deal and is not included in your financing.
• moving expenses
• deposits required by utility companies
• household goods
• kitchen appliances
• garden equipment
• garbage cans, tools, window coverings, etc.
• redecorating or renovations
• Neighbourhood or association fees, if applicable
• Clubhouse or other membership fees
• Additional parking fees or RV parking
• Temporary storage while moving and getting settled
• A few bottles of wine to share with your new neighbours!
PETE COOLIO REAL ESTATE IS ALSO ON FACEBOOK
ROYAL LEPAGE WESTBANK
2475 Dobson Road
ROYAL LEPAGE KELOWNA
1890 Cooper Road
THE CLOSING COSTS