Home Buying Guide – The Hidden Costs

Most of us, when buying a home browse through MLS listings based on the price we can afford to pay. However, when it comes to buying a home there are a number of hidden costs to consider. These costs can add up and it can make sense to take them into consideration when searching for your first, or next, home in Vancouver. This guide covers the most common costs, though others may apply!

 

Basic Costs

 

• Mortgage Application Fees; charged by some, but not all, lenders these vary depending on the provider. It pays to shop around!

 

• Appraisal fees; typically around $300 but variable. Appraisals are normally required by your mortgage provider, but not in all cases. Some providers will pay these costs. The Fee is subject to subject to Goods and Services Tax (GST).

 

• Land Surveys; again, often required by lenders with typical costs in the region of $700 plus GST. Normally you will be required to foot the bill.

 

• Home Inspections; usually another requirement of the mortgage lender. The inspection looks at the condition of the home, including structural issues, electrical, plumbing and roofing infrastructure. Fees are generally in the range of $500 - $700 but can vary widely depending on the age and condition of the property.

 

• Goods and Services Tax; on a new home the GST is 5%. Rebates are available on new homes up to the value of $350, 000 and may be available on some new homes up to $450,000. As mentioned above GST is also paid on professional services.

 

• Provincial Sales Tax (PST); this is paid on legal or notary fees but not other professional fees, GST will also be applied on these fees.

 

• Property Transfer Tax (PTT); this is paid on all home purchases, the rates are currently 1% on the first $200,000 and 2% on the remainder of the value. First time buyers may be eligible for an exemption on some or all of the PTT costs – more information on cost saving programs for home buyers in Vancouver and British Columbia can be found by clicking here.

 

Adjustments

 

Adjustments will normally be detailed in the contract of purchase and will vary in terms of cost from property to property. The most common are listed below.

 

• Property Tax Adjustment; the contract may require the buyer to reimburse the seller for any prepaid property taxes.

 

• Utility Adjustments; water and sewer fees are normally prepaid and the contract may require the buyer to reimburse the seller for any period already paid for.

 

• Other adjustments may be requested by the seller – in general you should take advice from your Realtor or other professionals as to whether you should agree to these.

 

Additional Mortgage Costs

 

• Life Insurance; this a requirement for most lenders, the insurance should clear the outstanding loan if the borrower dies.

 

• Liability, Home and Fire Insurance; again, required by lenders the policy or policies should cover extended liability, fire and building insurance. These policies need to be effective by the completion date, although some lenders may require an earlier date.

 

Other Fees

 

• Legal Fees; a lawyer or notary will normally be required to check legal documents and ensure the property is transferred correctly. Fees vary and shopping around is, again, the best option.

 

• Moving Costs; these will vary depending on the distance you move. If you're moving from one side of the country to another they'll be considerable, shorter distances will be less so. You may even choose to do the move yourself, if you have the time!

 

• Utility Fees; these will include hook ups to cable, phone and other utilities. Generally in the region of $200 - $300, though these can vary.

 

• Security; it's advisable to change the locks when you move in, new locks will cost approximately $100 for each door, for standard systems with electronic locks costing more.

 

• Strata or maintenance fees; if you are buying a Vancouver condo these fees will be payable each month. They are normally due on the first of the month – so you may want to consider the date that you move!