Closing costs – the list of charges that your lawyer presents to you on the closing date may surprise you. There are additional costs over and above the price of the home that you should be aware of.
Below you will find a brief explanation of these costs. Please note that not all of them may apply to your specific situation, and there may be more that apply to your circumstances. Use this is a guideline, and then talk with your lawyer to obtain a more realistic estimate for your situation, since lawyers are the best resource for your closing costs.
All mortgage lenders will require a certificate of fire insurance to be in place from the time you take possession of the home. The amount required is generally 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. The cost can vary anywhere from $250-$600 for most properties per year.
Title Insurance or Land Survey Fee
A recent Survey of the property is usually required by the lender, and if one is not available, it normally costs anywhere from $600-$900 for a new survey. In lieu of the Survey, most lenders today will accept Title Insurance, at a much lower price of approximately $225.
Legal Costs and Disbursements
A lawyer or notary will charge a fee for their professional services involved in drafting the title deed, preparing the mortgage, and conducting the various searches. The disbursements, on the other hand, are out-of-pocket expenses incurred, such as registrations, searches, supplies, etc., plus G.S.T.
Land Transfer Tax
Most provinces, including British Columbia, charge a land transfer tax payable by the purchaser. This tax is based on the purchase price. In British Columbia, first time home buyers (or buyers who have not owned a home in the last four years) may be exempt from this tax on purchases up to $475,000. The regular tax is calculated as 1% on the first $200,000 purchase price and 2% thereafter.
G.S.T. for New Homes
On the purchase of a newly constructed home, HST is payable, but make sure you know who pays this – you or the builder. Therefore, on the offer, the purchase price will say “Plus HST” or “HST Included”, and who gets the HST new home rebate. A lot of builders have included this cost into the purchase price so that the buyer does not have to come up with that at closing. (As well, this tax is also charged on all professional fees).
You have to reimburse the vendor for prepaid costs such as property taxes, strata fees, and utility bills such as gas, hydro and water.