Guide To Purchaser's Expenditures
This page is prepared to assist purchasers of a home to calculate the total expenditures that may be necessary for any home purchase. Purchasers are most annoyed if they are unprepared for any costs at the time of completion. These are some of the potential costs a purchaser should be aware of:
Purchase Price
Property Purchase Tax.
The property purchase tax is payable on the purchase of all real property in British Columbia. It is calculated based on 1% of the purchase price up to $200,000.00 and 2 % of any amount above $200,000.00. There does exist aFIRST TIME HOME BUYERS Property Purchase Tax Exemption Program
- Each buyer must be a Canadian Citizen or a permanent resident of Canada and must have resided in B.C. for at least one year immediately prior to the application register.
- The amount borrowed must be 70% or more of the fair market value.
- The fair market value of land and improvements must not exceed $275,000 if located within the lower mainland.
Mortgage Loan Insurance
High ratio mortgages (those with less than 25% down payment) require mortgage loan insurance. The cost is usually added to the mortgage loan, see table below:Loan to Value Ratio and Corresponding premiums:
% Borrowed
% Premiums
To 65%
0.50%
65.01-75%
0.75%
75.01-80%
1.25%
80.01%-85%
2.00%
85.01-90%
2.50%
90.01-95%
3.75%
Appraisal Fee
This is the cost for a professional appraiser's opinion of the value of the property. The mortgage lender will require an appraisal to determine whether the selling price is reasonable for that market.Home inspection fee
This covers the cost of a professional inspection of your home. This cost varies between companies, between $250.-$400. This is paid at the time of inspection.Legal Fees.
This will be the amount of legal fees paid to the Purchaser's lawyer or notary. The amount of legal fees will range and it is not necessarily the case that a notary will charge lesser fees than a lawyer. A Purchaser should realize that there are significant differences between the level of service that a lawyer will offer when compared to a notary. A notary can not give legal advice. In my view, legal advice would include explaining the effect of a mortgage, explaining the consequences of a default on the mortgage, explaining a Purchaser's options if a seller decides to back out of the Contract of Purchase and Sale and determining if the Contract of Purchase and Sale is binding. Therefore, in choosing between a lawyer or a notary, the Purchaser should consider the competence of a lawyer or notary, the degree of risk one is prepared to assume and the level of service required - ie; whether or not legal advice is necessary. When viewed in this manner, I believe most purchasers will elect to retain the services of a lawyer who specializes in Real Estate transactions.Disbursements.
This refers to any out of pocket expenses incurred by the lawyer or notary on behalf of the Purchaser. It will include various Land Title searches, tax searches, courier costs, photocopies, postage, filing agent fees, long distance telephone calls etc.Transfer Filing Fee.
This is a charge of $50.00 paid to the Land title Office to register the property into tire Purchaser's name.Mortgage Filing Fee.
This is a charge of $50.00 paid to the Land Title Office to register each mortgage that will be registered against tire title of the property.Insurance Binder.
This is a requirement by the bank or trust company to ensure that the Purchaser has arranged fire insurance on the new home. Proof of insurance coverage by way of an insurance binder is necessary and the typical cost will range up to $35.00.Fire insurance
Mortgage lenders want you to protect your home (and their mortgage collateral) against fire and weather related damage so you will have to purchase fire insurance for your home.Survey.
Generally, a bank or trust company will require a Survey to confirm that the house does not encroach or cross over the property line. A Vendor will often already have a Survey, especially if the Vendor also had a mortgage on the property. Otherwise, a new Survey on a house will cost approximately $270.00. Surveys are not necessary if the Purchaser is buying a strata property or condominium.Form "B" Certificate.
This is required only when a strata property or condominium is purchased. The Certificate is issued by the strata corporation in order to confirm that the previous owner does not owe the strata corporation any money. This Certificate will range in price up to approximately $40.00.Adjustments.
These are prepaid expenses which will need to be prorated between the Vendor and the Purchaser. For instance, a typical adjustment deals with the property taxes paid to the City or Municipality. The amount paid will be adjusted as of the adjustment date and one party will be required to reimburse the other. Other typical adjustments include strata maintenance fees and utility expenses.Moving Expense
The cost for do-it-yourselfers to rent a truck, or hire professional movers.
This information is being provided to assist in the planning of a home purchase. It is not intended to be legal advice and the information set out may not be applicable in all cases. In some situations, a Purchaser may be required to pay for other additional expenses such as a second mortgage, an assignment of rents, or a power of attorney. Each client will be different and I recommend that the Purchaser consult with their lawyer as early as possible to confirm the actual cash requirements necessary to buy a home.