Understanding Your Closing Costs

Buying a home is an exciting milestone, but beyond the purchase price, there are additional closing costs that buyers should be prepared for. Factoring these costs into your budget ensures a smooth and stress-free transition into homeownership. Here’s a breakdown of key expenses to consider:

HOME INSPECTION FEE: Before purchasing, a home inspection is highly recommended to identify any issues with the property. Inspections typically cost between $300 and $500.

PROPERTY TRANSFER TAX (PTT) is paid when a buyer is registered as the new owner at the land title office. The tax rates are:

• • 1% on the first $200,000 of the property’s fair market value, 
  • 2% on the value between $200,000 and $2,000,000, 
  • 3% on the value above $2,000,000, and an additional 2% on any residential portion exceeding $3,000,000. 
    • For example, your PPT on a purchase of $1mil, your amount owed is $18,000 (exemptions apply for first-time home buyers)   

APPRAISAL FEE: If you’re getting a mortgage, your lender may require an appraisal to confirm the property’s value. Appraisal fees typically range from $150 to $350, depending on the property type and location.

GST: This applies to newly constructed or substantially renovated homes. GST in BC is 5%, which can substantially increase the final cost of a new home. 

• • For example if you purchase a home for $1 mil that has GST on top of the price, your GST amount is $50,000

LEGAL FEES: You’ll need a lawyer or notary to facilitate the transaction, register the property, and ensure everything is legally sound. Fees typically range from $800 to $2,500, with strata and leasehold properties requiring additional complexity.

PROPERTY INSURANCE: Lenders require property insurance to protect against fire and damage. If purchasing a strata property, fire insurance is typically included in strata fees.

PREPAID PROPERTY TAXES OR UTILITIES: The seller must be reimbursed  for prepaid taxes and utilities which will appear in the Statement of Adjustments prepared by your lawyer/notary.

STRATA MOVE-IN/OUT FEES: If purchasing a condo, the strata may charge fees for moving in or out. This can vary from $50 – $200. 

UTILITY SET-UP CHARGES: There may be fees associated with setting up new utility services or transferring existing ones.

ADJUSTMENT COSTS: Buyers are responsible for costs that the seller has pre-paid beyond the purchase date, such as property taxes, utility bills, and condo maintenance fees.

INTEREST ADJUSTMENTS: This cost covers any interest accrued between the mortgage advance date and the date the first mortgage payment is due.

MORTGAGE DEFAULT INSURANCE: If your down payment is less than 20% of the purchase price, you’ll need mortgage default insurance. The premium is calculated as a percentage of the mortgage amount and can be added to your mortgage.

Before writing an offer, map out these additional costs so you’re financially prepared and not caught off guard. Being informed allows for a seamless and stress-free home-buying experience.

Have questions? Let’s chat! We’re happy to guide you through the process.