Every real estate transaction is different and unique. Your additional expenses in respect to your purchase most likely will be different from the ones I am listings below. Please consider the ones that I am sourcing below only for the sake of reference and general understanding. When we meet to discuss your real estate plans, we will talk about them in detail and in terms and numbers applicable to your purchase. I sort the potential expenses by stages of the purchase process and, if by now you have not read about it, please go to the page of my web-site that describes the process of purchase
Expenses you encounter after the offer is accepted and before subject are removed
1. Technical inspection of the property
It is up to you if you would like to employ a professional to conduct and inspection of your property. Though it is not compulsory, I strongly recommend to do it, even if you are buying a new or nearly new property.
Estimated costs: usually inspectors charge by approximate size of the property and charge extra if you would like them to do more, for example, read and interpret an engineering report on the building.
Estimated costs: The prices vary from $350 for an average condo to $650 for an average home.
2. Appraisal Fee
Before a lender would proceed with your mortgage application, they usually want to make sure that you are paying a fair market price (or below it :)) for your property. They need some assurance because your property is a collateral for the loan.
Estimated costs: $250
3. Survey Fee
If you are buying a detached property, most likely one of the conditions of obtaining mortgage for your new home will be survey certificate which indicates borders of your land and positions of the buldings and structures on the lot. Quite often this document is available from the seller or from the city hall. Sometimes, especially for older homes, it is lost. In this case you need to order a survey. Quite often for different reasons, it is not possible and survey can be substituted by title insurance that would protect your lender and you, depending on the coverage you choose, should any loss from inconsistency in land measurements and position of the building on the property occurs later.
Estimated costs: Survey Fee - $400 - 600 for an average house, Title Insurance - $150 - 500 depending on coverage you choose and value of the property
Though deposit is not really an expense because later it will be taken into account as a part of the purchase price, you need to plan your finances and it might be a quite substantial amount.
Estimated costs: Buyer and Seller in the contract of purchase and sale agree on the amount of the deposit, which might vary, though it would be prudent to plan for approximately 5% of your purchase price. Traditionally, deposits are higher if you buy a pre-sale new construction property.
1. Property Transfer Tax
This tax cannot be included into the amount of your mortgage and therefore you need to plan this amount in advance.
The amount of the tax is calculated as 1% on first $200,000 plus 2% on balance of the purchase price.
Examples of Property Transfer Tax calculation:
Purchase price $300,000.
1% on first $200,000 equals $2,000. 2% on $100,000 balance of the purchase price equals $2,000.
$2,000 + $2,000 = $4,000
Purchase price $600,000.
1% on first $200,000 equals $2,000. 2% on $400,000 balance of the purchase price equals $8,000.
$2,000 + $8,000 = $10,000
Purchase price $1,000,000.
1% on first $200,000 equals $8,000. 2% on $800,000 balance of the purchase price equals $16,000.
$2,000 + $16,000 = $18,0000
2. Harmonized Sales Tax (HST)
Generally speaking, this tax is applicable for the new or never occupied properties. There are very few exempts when it is applicable for resale properties. This tax is calculates as 12% of the purchase price of the property. There is a system of rebates which allows the buyer to reduce the amount of the tax, for example:
Regulations change and sometimes they are not that straight forward as it might look like. I do recommend to consult an accountant should you encounter a possibility of paying HST when buying real estate.
HST might be included into the amount of your mortgage.
Estimated Costs: 12% of the purchase price minus rebates you qualify for
3. Annual Property Tax and Utilities
When you are buying a property, at completion, your lawyer or notary public will make sure that taxes and city utilities (water, sewer) are covered for the current year. If you seller has already paid the property tax and utilities you will need to reimburse the seller for the time you are going to own the property in the current year. If the seller has not paid taxes and utilities, your lawyer or notary public will calculate the amount the seller pays you proportionally to the time of his or her ownership. In this case you will pay taxes later.
Estimated Costs: Condo in Port Moody. Assessed value as of July 01, 2010 $398,000. In 2011 utilities payment due March 31, 2011 is $696.35. Property Tax due July 04, 2011 is $2,184.00 no grant, $1,614 basic grant, $1,339 additional grant. You can read more about the system of grants developed to reduce Property Tax burden for ones who qualify following this link: Home Owner Grant
4. Legal Fees
Estimated costs: $1,000 if you are buying with mortgage, $600 if you are buying without mortgage
Other Additional Expenses
1. Property Insurance
One of conditions of obtaining finacing for your purchase states that you have to maintain the property insurance. How much such insurance is depends on may factors: age of the property, age of the occupants, location, age and quality of electrical system, distance to fire hall and hydrants and many others.
House in Coquitlam priced around $500,000. Occupied by a singe family. Built in 1978. Size of the house 2,000 sq.ft. Approximate annual insurance in 2011 is $715 without earthquake coverage and $985 with earthquake coverage.
House in Burnaby priced around $800,000. Occupied by two families (owner's family and tenants in the basement). $1,550 per year in 2011 without earthquake coverage and $2,130 with earthquake coverage.
Though the numbers above are real, two visually identical homes can get absolutely different rates when it comes to insurance. I do recommend obtaining a quote for the insurance before you make a final decision to buy a particular property.
If you are buying a condo or a townhouse premiums for the property insurance are normally included in your maintenance fee with exception for Content and Liability insurance (please see next paragraph).
2. Content insurance
When buying a detached property, content and liability insurance is usually included in the insurance package you are buying. When buying in strata, I highly recommend you to buy Content and Liability insurance, though it is optional. While blanket insurance policy purchased by the strata corporation will cover everything in the form that was done by the original developer, Content and Liability insurance will cover your updates (for example you changed original carpet for hardwood flooring), your content (furniture and personal belongings), content of the others damaged in the event of your fault (you flooded condo below you) and will cover strata deductibles for the main policy, which might be quite significant.
Estimated costs: $180 - 350 depending on coverage you choose
3. Life insurance
Optional, but sometimes it is a smart choice to have one, especially if you have a family and your property is mortgaged.
Estimated costs: $10 - ...... depending of coverage you choose.
4. Move-in fees
In almost all condo building and some townhouses you need to pay to move-in.
Estimated costs: $50 -200
5. Miscellaneous expenses
Most common: Moving truck rental. Movers. Deposits for opening hydro, gas, internet, tv, telephone service accounts. Changing locks. Additional remote controls for garage doors or accessing the building (for condos).
Let's meet and talk about your expenses in respect to your purchase. Please feel free to call me on my cell phone (604)807-6039 or fill out the form below and I will contact you at my first opportunity.
Tatiana , Your real estate agent