 Costs
to Consider
Buying
a home costs more than the offer you make. There are numerous other expenses
that will add to the amount that you'll need to spend. This purchase price
checklist outlines all the costs you can expect. Please note that they
can vary by province and are subject to change.
Purchase
Price
The starting
point in your calculation... if you're like most first-time home buyers,
you'll need a mortgage for the majority of this!
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Lawyer's
Fees
Although
fees vary across the nation, it can cost you up to $1,200 depending upon
whether you are re-mortgaging your existing home or buying new. Contact
me or your realtor to help with this process.
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Land
Transfer Tax
A tax
payable to the Provincial Government by the purchaser upon the transfer
of title from a seller. This amount is usually not expected by most homeowners.
It can be sizeable. The amount varies from province to province and is
generally a percentage of your purchase price. Cam can advise you.
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Registration
Fees
Fees paid
to the provincial government for recording a title transfer, mortgage registration
or other instrument such as an Assignment or Lien with the local authorities.
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High
Ratio (Mortgage) Insurance
Must be
purchased if you are buying a home for less than 20% down. A sliding fee
scale applies, depending on the percentage of the purchase price required
in a first mortgage (some minor exceptions).
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Compliance
Letter
Obtained
by your lawyer and required in many municipalities throughout Canada before
a property transfer can take place. This is an acknowledgement from the
building department that the property either has, or is clear of outstanding
work-orders. Work-orders are specific clean-up or fix-up requirements that
the owner is legally required to do, and which must be completed before
ownership can be transferred.
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Tax
Certificate
Obtained
by your lawyer at the time of sale to confirm that local taxes have been
paid up to date. If they are not up to date, the seller is required to
pay them from the proceeds of the sale. If there are insufficient proceeds,
then you may be legally required to pay the outstanding taxes. If, on the
other hand, taxes have been prepaid, you may have to compensate the seller
for them.
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Provincial
"New Home Warranty Program" premiums — New Homes Only!
A third
party (provincial) warranty program between a builder and a buyer. With
the exception of Ontario and Quebec, membership in such a program is voluntary
for the builder. Through these programs, your home is guaranteed against
defects for at least one year. All homes with a high-ratio insured mortgage
(greater than 80% loan to value) must be enrolled in such a program.
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Mortgage
Appraisal and Application Fees
Application
fees apply on high ratio mortgages only while appraisal fees are common
to most mortgages. Generally $150 — $235 each would apply.
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Home
Inspection
A report
commissioned by a property owner or purchaser, usually to verify the condition
of a property prior to the "firming up" of a purchase agreement. The scope
and detail may vary, but most reports outline any particular problems and
associated repair costs. Unfortunately, no licensing is required, and this
service is not specifically regulated other than by general consumer protection
legislation. The best safeguard against inadequate work is to ask for the
resume of the Inspector, or select a name firm, such as Carson Dunlop,
who stand by their work.
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Land
Survey
The legal
written and/or mapped description of the location and dimensions of your
land. The survey should also show the dimensions and placement on the lot
of any structure, including additions such as pools, sheds and fences.
An up-to-date survey is often required by a lender as part of the mortgage
transaction.
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Title
Insurance
New to
Canadian consumers over the last few years is the introduction of title
insurance into the home buying process. Title insurance can be purchased
by home buyers to protect against potential deficiencies in a number of
areas, such as the land survey. There are numerous benefits to this product,
and you should consult your lawyer or me today.
Connection
Charges
Some local
utility companies (hydro, gas, oil) charge a fee on closing to connect
new buyers up to their service. More common, however, is an extra charge
on the first billing.
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Property
Tax and Prepaid Utilities Adjustments
If the
previous owner prepaid property taxes or other utilities, they will be
credited the prepaid portion on closing. If they paid all their taxes by
April, expect a large adjustment cost on closing!
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Interest
Adjustment (IA)
If you
arrange to make your mortgage payments monthly on the first day of the
month, and your transaction closes after the first day of the month, your
lender will charge you interest on closing to the next interest date, called
the Interest Adjustment Date (IAD), when your payment cycle will commence.
This can be a sizeable amount, but it is the correct interest you should
pay. For example, close on June 15th, pay 15 days interest on closing and
start payments on August 1st.
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