Posted on March 12, 2014

Out of Hiding: Getting to Know All Your Home Buying Costs

In Vancouver we have one of the strongest real estate markets in the country and even in the world, yet it's still important to be fully aware of the dollars you'll be spending to land your dream property. Whether you're spending your life savings to buy your first home, or strategically investing in a property with high potential for increased value, preparing for the ultimate cost of homeownership is a sure way to set yourself up for a little peace of mind.

It's easy to forget all the potential home buying costs, so we've put together this comprehensive list for you to work from:

Property Transfer Tax (PTT)

In BC, PTT is calculated at 1% for the first $200,000 a home purchase cost or value, and 2% thereafter. However, if you're a first-time homebuyer, you may be eligible to reduce or eliminate this cost

Government Sales Tax (GST)

This 5% tax applies on either newly constructed home, like at The Austin or Station Square, or substantially renovated homes. However, you may be eligible for a rebate from the CRA if the value of the home is $350,000 or less.

Property Tax

If you're purchasing a home mid-year, your seller may expect to be reimbursed for a portion of that year's property taxes. The amount is based on BC Assessment's value of the home from the previous year. For example, if you buy a home mid 2014, you'll pay a portion of the tax based on the 2013 assessment. 

Real Estate Lawyer

It's a good idea to have a lawyer or notary public help with the closing process. These fee will vary depending on the home's value and the complication of the contract, but plan to pay around $700 - $2000 for their service

Mortgage Insurance

With conventional mortgages (20% down payment or more), you likely will not face this cost. However, if you're using a high-ratio mortgage (5% down payment) to buy your home, you'll be required to purchase mortgage insurance to cover any potential default. This is a one-time payment that can either be paid up-front or added to your mortgage amount. Use CMHC calculator to estimate this cost. 

Appraisal Fee

This estimated $250-$350 fee is well worth it to ensure you're paying fair market value for your home. However, your lender will also likely require a professional appraisal before your mortgage is finalized. Some lending institutions will cover this cost to secure your business, so make sure to ask. 

Home Inspections

If you're purchasing a previously-owned home, this one is obvious to most to ensure the structure is sound and you won't face any surprise costs. However, there is some debate whether you need to hire a home inspector if you're buying directly from a builder (like us). Before you take possession of your home, a Pre-Devlivery Inspection (PDI) will take place between our inspector and you. However, bringing your own independent inspector can provide a valuable second set of qualified eyes on your behalf.

Property Insurance

When purchasing a property that is part of a strata, such as a condo, insurance will generally be included in your strata fees to cover maintenance of the building and common areas. However, it is advisable to purchase further insurance that will cover costs in your individual suite as well. Cost of insurance is based on the value of your property.