"What are the closing costs?"
Closing costs checklist
Here is a checklist I use to make sure my clients understand the range of closing costs.
Goods and services tax
Buyers must pay a five per cent federal Goods and Services Tax (GST) on the sale price of a new home (not a resale home). There are rebates. For information visit www.servicecanada.gc.ca and type in the search box, GST rebate for new homes. You will be taken to information and an application. Buyers also have to pay the GST on services such as appraisal and referral fees, survey fees and legal/notary fees.
Property Transfer Tax
Payable at the time the property is registered at the Land Titles office, the PTT rate is 1% per cent on the first $200,000 and 2% on the remainder. There is a rebate for eligible first-time buyers. For information visit www.gov.bc.ca and type in PTT rebate in the search box. You will be taken to an information page.
Mortgage application fee
Many lenders charge our clients a fee to process a mortgage application.
An appraisal is typically required for our clients to be able to secure a mortgage. Fees vary.
Mortgage broker's fee
Typically a mortgage broker is paid by the lender. But sometimes a buyer will pay a fee which can reach 2%.
Some lenders require property buyers to add property tax installments to monthly mortgage payments.
The federal government requires high-ratio mortgages (with less than 20% down payment) to be insured against default. The cost ranges from .25 to 3.75% of the mortgage amount which is added to the mortgage principal.
Land survey fee
Lenders may require a survey of the property. Survey costs vary.
Home inspection fee
Most clients and lenders require an offer to be subject to a professional inspection. Fees vary depending on the property size, the size of the home and the age and condition of the home.
Mortgage life insurance
If our client(s) pass away, this insurance pays off the balance owing on their mortgage.
Fire and liability insurance
Lenders typically require property buyers to carry fire and extended coverage insurance and liability insurance.
Lawyers charge for services including reviewing the offer to purchase, searching the title, drawing up mortgage documents, overseeing the closing, and disbursements and other costs for conducting a title search, preparing the title deed, preparing and registering the mortgage.
More costs and fees
These include property taxes, utility bills, moving expenses, new lawnmowers, hoses, ladders, paint, carpet, appliances, locks, curtains and more.
Source: The Ethics Guy, REBGV