Full Home Buying Cost Estimator 2021
The cost of buying a house in BC is so much more than just the purchase price, and it’s important that you understand the true cost of buying a home BEFORE you get an accepted offer. Knowing these costs in advance will help you decide what you’re really comfortable with purchasing, ensure that you will have enough money in your pocket for a rainy day, and avoid scrambling last minute to collect all the funds to close!
Here, we go through the expenses you should consider for before, upon, and after your purchase completes.
Subject Removal Costs When Buying a Home in BC
Once you have an accepted offer, there are certain costs that you should be aware of that will likely be incurred during or immediately after the subject removal phase. Here are the main costs that you should be aware related to subject removal:
- Property Appraisal – $300-$450 plus GST, an appraisal is hired by the lender to confirm the value of the home you’re purchasing. An appraisal is not always required, but is common for buyer’s putting at least 20% down. Your mortgage broker may also cover this cost as a part of their service, so ask if the appraisal is applicable to you and if you are responsible for paying it.
- Home Inspection – $300-$600 plus GST depending on the size of the home, paid to the home inspection company at the time of the inspection – expense borne by the buyer. In some cases, the seller may have had a pre-inspection done. In other cases, you may choose to waive the inspection clause altogether.
- Deposit – this is usually 5% of the purchase price in Greater Vancouver, paid either upon or within 24 hours of your offer being accepted depending on how the contract is structured. It should be made out to the buyer’s agent’s brokerage in trust, and will be held until closing. This deposit will form a part of your down payment.
Closing Costs when Buying a House in BC
After removing subjects and closer to completion, your lawyer or notary will prepare a statement of adjustments for you so that you can review your debits and credits, and see a final amount of what is owing. Estimating the cost of buying a house is an important step to determining what you can afford, and ultimately how to avoid being stretched too thin. Here are the main costs you should consider for upon the closing day.
1. The Balance of the Purchase Price – The purchase price less your initial deposit. Usually, the bulk will come from your lender and become your mortgage.
2. Legal Fees – Amount varies depending on purchase price and lawyer/notary. This should also include acts such as ordering a title search and registering title. It is safe to estimate about $1000-$1500.
3. CMHC Insurance Premium – Insurance premium charged if you have less than 20% down payment. It is common for the mortgage broker to include this in your monthly payment.
4. Title Insurance – Sometimes included in your legal fees ($250-$400).
5. Strata Documents – Usually ordered by the listing agent or the property, but an updated Form B may be required by the lender or lawyer if there is a long completion and the existing one is out dated. If required for a rush may be up to $100-200 extra.
6. Strata Move in Fee – One time fee that varies from strata to strata as this is an amount set out in the bylaws for each strata. Safe to estimate about $100-$200 but ranges up to $300.
7. Property Survey – Lenders may require a survey of the property, which ranges from $500 upwards + GST. This is not required on strata properties.
8. Home/Fire Insurance – Lenders typically require home buyers with a mortgage to buy home insurance. The insurance should be effective on the earlier of either the completion date or the date that the balance of funds is placed in trust. Most lenders require property buyers to carry fire and extended coverage insurance and liability insurance.
9. Property Transfer Tax (PTT) – For most residential properties, the property transfer tax rate is:
1% on the first $200,000, 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000, 3% on the portion of the fair market value greater than $2,000,000, and if the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000 (effective February 21, 2018)
If you are a first time home buyer you may be exempt from this fully if your purchase is less than $500,000. Partial exemptions apply for a purchase price between $500,000 and $525,000. Above $525,000 this exemption is nil.
10. Foreign Ownership PTT – an additional 20% of the fair market value is charged if your title is transferred to a foreign entity. If this is purchased with an entity that is not deemed a foreign buyer, then it is only 20% of the proportionate share. This applies to foreign buyer purchases in the following regions:
- Capital Regional District
- Fraser Valley Regional District
- Metro Vancouver Regional District
- Regional District of Central Okanagan
- Regional District of Nanaimo
The additional property transfer tax doesn’t apply to properties located on Tsawwassen First Nation lands.
11. Property Tax Adjustment – Generally, property taxes are paid on July 1st for a full calendar year. If your move in date is post July 1, you will likely have to provide a reimbursement to Seller of property taxes they paid beyond the closing date. However, this can also be a credited amount back to the buyer depending on the move-in date and whether or not the seller paid the taxes prior to the due date.
12. Adjustments for Utilities/Condo Fees/etc. – Reimbursement to Seller for prepaid utilities, water fees, strata maintenance fee, etc. (amount varies)
13. Adjustments for Rentals and Security Deposits – If the home has a rental portion, or you are taking over a rental, the security deposit should be credited to the buyer from the seller. Additionally, if the move in date is past the monthly rental payment date, the seller should credit the buyer for a portion of that month’s rent.
14. GST – 5% tax based on the purchase price; generally only applicable on newly built homes (ie presale condos). A GST rebate equivalent to 36% of the 5% GST paid is available for new homes priced up to $350,000 and a partial rebate on new homes priced up to $450,000 may also apply to you. GST can be added to your mortgage unless you are receiving a rebate, in which you need to pay your portion of the GST in full.
15. Mortgage Broker Commission – If applicable, usually paid by the lender.
What You Need to Pay For After Closing
- Moving Expenses ($1,000+)
- New locks (varies depending on how many)
- Household Goods (varies)
- Utility Connection Charges(varies)
- Redecorating and Renovating Costs(varies)
- Immediate Repair and Maintenance Costs(varies)
- Elevator or move in deposit (refundable by the strata)
Be aware of buyer tax exemptions and if they apply to you!
One of the most important things to know is what exemptions there are available to you for closing costs, most notably taxes.
Three common tax exemptions that can help bring down the cost of buying a home are:
For example, the PTT exemption for first time home buyers can save those purchasing under the $500,000 purchase price mark up to $8000. Knowing the difference in costs saved for a purchase of just over $500,000 and just below $500,000 is SO important as this is an exemption you can only qualify for once.