Cost of Purchasing a Home
Deciding to buy a home is a major decision, both financially and emotionally. Since buying a home is probably the single largest purchase a person will ever make, it is important to do your research and know ahead of time all of the costs associated with doing so.
Legal Fees and Expenses
It is normal practice in BC for buyers to use a lawyer or notary public to transfer ownership of the property. A lawyer reviews the documents that your realtor has prepared to ensure nothing is missed.
Lawyers are responsible for:
- Searching the title in the Land Title and Survey Authority Office.
- Ensuring the sellers old mortgage is properly discharged.
- Confirming all payments the seller is responsible for have been made.
- Preparing a Statement of Adjustments outlining all monies owed by you and the funds you will need to complete the transaction.
- Delivering the final amount due to the seller and ensuring you are registered as the owner in the Land Title and Survey Authority Office.
Lawyers fees generally vary depending on the amount of work done and the lawyer themselves, but you can expect to pay anywhere from $1000-$2500.
Although doing a home inspection isn't mandatory it is still highly recommended.
A home inspection will usually look at the following things:
- Heating and cooling systems
Although home inspectors cannot guarantee that you won't have any problems with the house, they do provide you with piece of mind and often can save you money down the road by identifying problems before they become too big. Keep in mind that inspectors don't look inside walls and most don't include termite inspections as well.
Costs will vary depending on the size of the home. You can expect to pay $300-600.
As mentioned above, a home inspection may not look for termites. If you are considering buying a home in an area with known termite activity you may want to have a termite inspection done.
Other inspections include a water quality inspection. If you are moving to a property that is on a well you may want to have the well inspected for water quality and quantity. Some areas may not have potable water from the well, while others may have low GPM (gallons per minute).
GST: In BC if you are buying a new home or a home that has been extensively renovated, you will have to pay GST. However, there may be some rebates available depending on the purchase price of the home.
Property Transfer Tax
Property transfer tax must be paid on all purchases unless you qualify for a first time home owner’s grant.
Property transfer tax is 1% on the first $200,000 plus 2% on the remainder. For instance, if you purchase a house for $350,000 you would owe 1% of $200,000 which is $2,000 plus 2% of $150,000 which is $3,000 for a total of $5,000.
For more information of the First Time Home Owner Program visit the Government of BC website Property Transfer Tax information page.
If the current owners have already paid the current year's property tax, you will have to reimburse them for your share of the year's taxes. Your lawyer will take care of this calculation for you.
Sometime your lender will request a a property survey to verify the property's boundaries and ensure the property is within the boundaries. Often times the seller will have a copy of the survey certificate, but if they don't it may be your responsibility to pay for the survey costs.
You can also purchase title insurance for around $200-$400. Title insurance is an insurance policy that protects you, the home owner, against challenges to the ownership of your home or from problems related to the title to your home. The policy protects you against issues such as rights of way, encroachments (from neighbouring properties), unpaid liens, etc.
Your lender will make it mandatory that you have home insurance to cover the property in case of unforeseen events. If you think about this from the banks point of view, it makes sense for them to require you to have home insurance, the house is their collateral for the loan. If something were to happen that completely destroyed the house such as a fire, the insurance company would be required to pay out your mortgage first, before you receive any insurance proceeds.
Your home insurance is based on the value of the house and what its replacement cost would be. Your lawyer will require confirmation that insurance has been arranged. Cost can vary significantly based on the home and types of coverage.
Mortgage insurance protects the lender if you were to default on your mortgage. It is usually required when your deposit is less than 25% of the appraisal cost of your home. It protects the lender in case of foreclosure, if the price of your house has decreased in value and the value of your home is insufficient to repay the cost of your debt.
The cost of mortgage insurance is usually added to the total loan amount and paid for over the term of the mortgage.
They may be minor in comparison to other fees associated with the purchase of your house, but it’s still important to keep hook-up fees in mind, especially if you are on a tight budget with the purchase of your new home. Hook up fees may apply for utilities such as electricity, gas, telephone, internet and cable/satellite.
Depending on how much stuff you have and how far you are moving, costs can vary significantly. For example, if you are moving from Toronto to Kamloops, and you are currently in a 4 bedroom home, you need to ensure you get quotes ahead of time for the move so you aren't caught off guard when the time comes. However, if you are just relocating in Kamloops the cost may not be so big.
If you buy or sell your home with River City Realty you can use our moving trailer free of charge! Contact us for more details.
This section is endless and entirely depends on how much money you want to spend on your new home. But some important things to keep in mind when purchasing a new home are appliances, window coverings and furniture. If appliances aren't included in the deal you will have to purchase these yourself: fridge, stove, washer/dryer, microwave, dishwasher, all of these items can add up quickly.
It’s also important to remember the small things. If you are purchasing a house with a pool, you may need to buy pool cleaning supplies, or if you have grass you may need a lawn mower. Also, many people like to get the locks re-keyed or changed when they buy a new house, so don't forget to work the cost of this into your budget as well!
Other costs that should be taken into consideration are things like condo or strata fees and the onging cost of maintaining your new home. Inevitably something will leak or break, so make sure you have some money set aside for minor repairs that may come up.
Overall, buying a new home can seem like a never ending financial burden, but at the end of the day it is an incredibly rewarding experience to own your own home. And as long as you are aware of the costs associated with buying a new home before you buy, and budget accordingly so that you don't buy a home that is more than you can afford, then the costs associated with it aren't as overwhelming.
A good real estate agent can also help you in understanding many of these costs and can give you the name of trusted professionals in the Kamloops area. So if you are interested in buying a home contact River City Realty today and we can get you started on the road to becoming a home owner.