Closing cost of buying a home in BC

Buying a house is a significant milestone in life, but it's essential to realize that the expenses involved go far beyond the purchase price. Before you dive into the real estate market and get an accepted offer, it's crucial to have a clear understanding of the true cost of buying a home in British Columbia. Being aware of these costs upfront will not only help you determine your budget but also ensure you have enough funds for any unexpected expenses that may arise during the process.

Let's break down the expenses you should consider before, during, and after your home purchase in BC.

Subject Removal Costs

Once your offer is accepted, you'll enter the subject removal phase, during which specific costs may come into play:

1. Property Appraisal: Typically, lenders require an appraisal to confirm the home's value. While it's not always necessary, it's common for buyers putting at least 20% down. The cost ranges from $250 to $400 plus GST, but your mortgage broker may cover it as part of their service.

2. Home Inspection: This is a crucial step in ensuring the condition of the property. Home inspection costs can vary from $300to $700 plus GST, depending on the home's size.

3. Deposit: In Greater Vancouver, the usual deposit is 5% of the purchase price. It's payable upon or within 24 hours of your offer being accepted, typically made out to the buyer's agent's brokerage in trust. This deposit forms a part of your down payment.This can vary depending on many factors.

Closing Costs

As you move closer to the completion of your purchase, you'll encounter additional expenses:

1. The Balance of the Purchase Price: This is the purchase price minus your initial deposit. Most of it will come from your lender and become your mortgage.

2. Legal Fees: Legal fees can vary depending on the purchase price and the lawyer or notary you choose. This includes tasks such as ordering a title search and registering title, typically ranging from $850 to $1500.

3. CMHC Insurance Premium: If you have less than a 20% down payment, you'll likely have to pay this insurance premium. Your mortgage broker may include it in your monthly payment.

4. Title Insurance: Sometimes included in legal fees, title insurance typically costs between $250 and $400.

5. Strata Documents: These are usually ordered by the listing agent or the property. An updated Form B may be required if there is a long completion period, costing up to $100-200 extra if rushed.

6. Strata Move-in Fee: This one-time fee varies by strata and can range from $100 to $300.

7. Property Survey Certificate: Some lenders may require a property survey, which can cost upwards of $500 plus GST, though it's not necessary for strata properties.

8. Home/Fire Insurance: Most lenders mandate home insurance, covering fire and extended coverage as well as liability insurance. Ensure it's effective by the completion date or when the balance of funds is placed in trust.

9. Property Transfer Tax (PTT): The PTT rate varies but is generally calculated as 1% on the first $200,000, 2% on the portion between $200,000 and $2,000,000, and 3% on the portion above $2,000,000. Additional rates may apply for high-value properties.

10. GST: This 5% tax is typically applicable to newly built homes (presale condos) and may be added to your mortgage or paid separately, depending on any applicable rebates.

11. Mortgage Broker Commission: If applicable, this is usually paid by the lender.

Expenses After Closing

Once you've closed the deal, there are several expenses to consider:

• Moving Expenses: Typically costing $1,000 or more.
• New Locks: The cost varies based on the number of locks.
• Household Goods: Expenses vary depending on your needs.
• Utility Connection Charges: Costs vary based on the services required.
• Redecorating and Renovating Costs: Expenses depend on your plans.
• Immediate Repair and Maintenance Costs: These vary based on the home's condition.
• Elevator or Move-in Deposit: This is refundable by the strata.

Additionally, it's essential to be aware of potential tax exemptions that may apply to you, such as the first-time home buyer property transfer tax exemption, newly built home exemption, and GST new home rebate. These exemptions can significantly reduce your closing costs.

Working with a realtor is a valuable step in navigating the complexities of home buying, as they can guide you through these costs, exemptions, and options that could save you money. The best part is that hiring a realtor is a free service, ensuring you have an expert by your side to protect your interests throughout the buying process.

In summary, buying a house in British Columbia involves various costs beyond the purchase price. Understanding these expenses and potential exemptions is crucial for making informed decisions and ensuring a smooth home buying journey.