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The Closing
Costs
It’s easy to count your available cash,
but remember that all of these cash
savings cannot be used as your downpayment.
There are last minute costs such as taxes,
legal fees, appraisal fees, moving
expenses and house insurance to pay before
you are finally in your new home.
The time to budget for those "end"
expenses is NOW. You must be prepared to
pay most, and perhaps all, of the
following closing costs.
Property Purchase Tax -The
British Columbia Provincial Government
imposes a property purchase tax, which
must be paid before any property can be
legally transferred to a new owner. The
tax is 1% on the first $200,000 of the
property value and 2% on any value over
$200,000.
Goods and Services Tax - If you
purchase a newly constructed home, you may
be subject to 7% GST on the purchase
price. However, if the home is under
$350,000, a rebate will reduce the GST
paid to 4.48% of the purchase price. If
the price is over $350,000 the net GST to
be paid increases gradually until it is a
full 7% at amounts over $450,000.
Property Tax - If the current
owners have already paid the full year’s
property taxes to the municipality, you
will have to reimburse them for your share
of the year’s taxes.
Appraisal Fee - When the lending
institution requires an appraisal of the
property before approving your loan, it
may be your responsibility to pay the
appraiser’s fee.
Survey Fee - The lending
institution may also require that a survey
certificate be presented to them. The
purpose of the survey is to formally
establish the boundaries of the property
and to ensure that all buildings are
within those boundaries. If the current
owner cannot provide a recent survey
certificate, it will be your
responsibility to pay the surveyor’s fee.
Mortgage Application Fee -
Lending institutions may charge a mortgage
application fee. This application fee may
vary between lending institutions.
Mortgage Default Insurance -
This type of insurance is required on all
mortgage loans in excess of 75% of the
appraised property value. Its purpose is
to insure that the lender will not lose
any money if you cannot make your mortgage
payments and the value of your property is
not sufficient to repay your mortgage
debt. The insurance premium is paid to the
lender and ranges from ½% to 3% of the
loan value; however; in most cases this
premium is added to the loan amount, and
is paid for over the term of the loan.
Life & Disability Mortgage Insurance
- At your option, you may purchase
insurance which will ensure that your
outstanding mortgage balance is paid if
you die or become disabled.
Fire & Liability Insurance - The
mortgage lender will insist that you
purchase an insurance policy, which
guarantees that, in the event of fire, the
lender will receive the balance owing on
the mortgage loan before you receive any
insurance proceeds.
Legal Fees - The transfer of
property ownership from the seller to the
buyer must be recorded in the Land Title
Office in order to protect the new owner’s
interests. You will probably want to
engage a lawyer or notary public to act on
your behalf during the completion of your
purchase. The legal fees for this service
will include payment of a registration
fee. If you are financing your purchase
with a new mortgage loan, there will be a
further fee to prepare and register the
mortgage documents.
Other Last-Minute Costs
Don’t forget to set some money aside
for:
Home inspection fees
Moving expenses
Deposit required by utility
companies
Household good: kitchen appliances,
garden equipment, garbage cans, tools,
window coverings, etc.
Redecorating or
renovations.
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