What are the Cost to purchase a condo or house in Burnaby? (Part 2 of 3)
Cost Estimator for Burnaby Home Buyer 2020 (Continue …)
Phase 2: Before and On Completion Date
CMHC Insurance Premium (Depends..)
If your deposit is below 20% and you need a home mortgage, the type of mortgage is considered as high-ratio mortgage. CMHC will require you to have 20% down payment.
The amount CMHC charge you is based on a sliding scale. the charge will be different when you have 5% down or 18 % down payment. While you can pay this lump sum at completion, it is also common to blend this CMHC Insurance Premium in your monthly mortgage payment. And it is one time payment at the beginning of mortgage. You may consult your banker or mortgage broker for more information.
It is Typically $900-$1400 + GST for title conveyance fee and document fee, but the amount varies depending on purchase price and, lawyer or notary public. This is the fee that the lawyer charges for their services transfer title of the property from the seller to the buyer on completion date. This should also include title search and registering title in general.
Title insurance protects you and the lender when there is any chance from title fraud, municipal work orders, zoning violations, and other property defects relating to Title While the lender may require you to buy it at your expense for your mortgage condition, sometimes, you will have an option whether you need to purchase title insurance or not. You may consult your lawyer in details how this may protect you.
Property Survey (House)
If the homeowner does not have a property survey, the lender or banker may require that you order a survey certificate of the property. The cost can range from $500 or more. This is not required on strata properties (eg. Condo or townhouse), and typically only applies to detached house lots.
You will be a new homeowner, you’re going to need insurance. Most lenders require homebuyers to purchase home, fire and liability insurance. If you’re purchasing a strata property such as condo or townhouse, the strata corporation will also require owners to have insurance for their own property in addition to the strata’s coverage for the building as a whole.
Nowadays, a buyer must be very careful when they buyer a condo. Must need to check the deductible of the building. For the last half year, many building has increase a lot for their strata insurance cost and deductible for water damage. When the deductible is high, it mean that the owner will pay more in their own insurance to cover bigger deductible. If the insurance requires that the deductible is over $100,000, most of the BC insurance company may not cover. Then, the buyer may need to seek other resource such as online insurance to cover the insurance with bigger deductible.
Insurance should be effective on the completion date of the sale.
Form B and/or Strata Documents (if strata)
The lawyer or Notary public may order the latest Form B or Strata Document to ensure that the lawyer get the latest strata updated document. It is up to the lawyer or Notary Public to decide.
Strata Move in Fee (if strata & if applicable)
The fee is one time fee for the owner or the investor to move in. The fee is usually stated in the strata bylaws. It is better to prepare the move in fee in your budget, estimating about $100 – $300.
The Balance of the Purchase Price
Don’t forget to prepare the balance of the price price consists of your additional down payment and mortgage from your lender or banker.
Property Transfer Tax (PTT)
Please note that this should be one of the biggest costs on the completion date. You may check if you are qualify for an exemption based on the latest tax exemption rule. In general, most buyer will need pay the property transfer tax on your purchase. The property transfer tax is based on the fair market value (eg. the purchase price in general). For most residential properties, the property transfer tax rate is calculated as:
- 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
The most notable exemptions for property transfer tax are the first time home-buyer PTT exemption and Newly Built Home PTT exemption. For more information on property transfer tax and PTT exemptions, you may find more information our “What are the Cost to purchase a condo or house in Burnaby? (Part 3 of 3) “.
Property Tax and Utility Adjustment – In General, property taxes are paid on July 1st every year. If your adjustment date in the contract agreement is post July 1, you will likely have to provide a reimbursement to Seller of property taxes they paid beyond the adjustment date. On the other hand, this can also be a credited amount back to the buyer depending on the adjustment date and whether or not the seller paid the taxes prior to the completion date. The calculation is based on the number of days belongs to the Sellers while the number of days belongs to buyers. The buyers and sellers will be paid on the prorated portion.
Some owner may pay the utility (eg. Water and Sewer fee) in advance as some cities may request to owner to pay the utility fee earlier. Similarly, the buyer will pay the prorated portion of the utility paid.
Adjustments for Condo Fees
It will be based on the adjustment date in the contract. For example, if your adjustment date (eg same as possession date in general) is on 15th of a month in April, then you will credit back 15 days of the strata fee back to the Seller who has paid the fee at the beginning of month.
Reimbursement to Seller for prepaid utilities, water fees, strata maintenance fee, etc. (amount varies)
Adjustments for Rentals and Security Deposits
If the home has a rental portion, or you are taking over the lease or keep the current tenants after the completion date, the security deposit should be transferred to the new buyer from the seller. Additionally, if the possession date is not at the 1 st day of month, the seller should credit the buyer for a prorated portion of that month’s rent.
Additional PTT – Foreign Buyer Tax (if applicable)
An additional 20% of the fair market value (or purchase price) is charged if you are non Canadian on the completion date (or the title is transferred to a foreign entity). This applies to foreign buyer who purchase the property in the following areas: Metro Vancouver, Capital Regional, Fraser Valley, Nanaimo & the Okanagan. The additional property transfer tax doesn’t apply to properties located on Tsawwassen First Nation lands or some exempted area. Please consult your accountant and lawyer for the latest update about the Foreign buyer tax.
For newly built house, townhouse, condo or real estate presale, the buyer will need to pay 5% tax based on the purchase price; If you want to include GST to be added to your mortgage, you may consult you banker for feasibility.
For more information on GST and rebate, please refer to our “What are the Cost to purchase a condo or house in Burnaby? (Part 2 of 3)” .
If you have any real estate question for buying, selling or property management, feel free to contact me at (778) 862-8321.
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