BC Closing Costs - 10 Items to Consider

1.) Property Transfer Tax: This tax is payable on the purchase of all real property in BC. The calculation is based on 1% of the purchase price up to $200,000 and 2% of any amount above $200,000. Most first time buyers are exempt from this tax if they meet certain criteria. Including but not limited to;
a) borrower has never owned a principal residence anywhere;
b) maximum purchase price of $325,000 in most areas*
c) mortgage to be at least 70% of purchase price;
d) be a Canadian citizen or permanent resident as determined by Immigration Canada and reside in BC for a minimum of 12 months immediately prior to the application to register the purchase of a principal residence or who has filed two income tax returns as a BC resident within the last six years

* Most areas with a maximum price of $325,000 include: Capital Regional District, Greater Vancouver Regional District & Fraser Valley Region. All other areas are limited to $265,000.

* A property with a fair market value of up to $25,000 more than either of these threshold amounts will be eligible for a proportionate amount of the exemption.

2.) Legal Fees: Legal representation will cost you approximately $800 for a purchase and a mortgage; add $100 - $150 if the property is strata to cover the cost of Form K & the Insurance Binder. If you are selling a property at the same time add $500.

3.) Interest Adjustment: This is the interest you will pay for receiving your mortgage money before the official start of your mortgage. IE: if your "completion date" is the 23rd of a 30 day month, your interest adjustment would be 8 days interest – from 23rd to 30th.

4.) Property Tax Adjustment: Generally, property taxes for the calendar year are paid at the beginning of July for the full calendar year. If you complete on your purchase before July 1st, the seller will be paying you for the days they owned the property from January 1st to adjustment date. You then are responsible for the entire amount to be paid to the municipality on July 1st. If you complete after July 1st you will pay the seller for the days you own the property from adjustment date to December 31st, as they will already have paid the entire amount to the municipality on July 1st. To calculate the approximate amount: take the annual taxes less $570 for the homeowner’s grant (if applicable) divide by 12 months and multiply by the number of months you will own the home in that year.

5.) Strata Cost Adjustments & Form “K” Certificate: For those purchasing a strata property, the "strata fee" adjustment will be based on the number of days that you own the property in the month that you close. This is determined by obtaining a Form “K” Certificate from the strata management corporation. Depending on where the property is located will determine whether the seller or the purchaser pays, approximate cost $50. Form K Certificate provides information such as; monthly strata fees & any arrears, special levies, contingency reserve fund balance, any resolutions passed but not yet filed in land title office, number of rental units and more.

6.) Property Appraisal: The property is evaluated by a professional appraiser to determine it’s market value. This is done to ensure that; a) the lending institution is not over lending on the property and; b) to protect the borrower from over-paying. Generally, a standard residential appraisal will cost approximately $300 - $400 (depends on size and location) and is paid at the time of application.

7.) CMHC or GENWORTH HIGH RATIO INSURANCE: Canadian law requires lending institutions to insure mortgages with less than 25% down payment/equity. CMHC/GENWORTH provides loan insurance to approved lenders, to protect the lender against the risk of the property owner defaulting on the mortgage. The premium is added to the mortgage amount.

Application and electronic appraisal fee - $165 fee was eliminated June 2006

8.) Property Inspection: An inspection is a thorough evaluation of the structure, systems and components of a home. The inspection report is usually multi-paged, and comments on the condition of, but not limited to: foundations, electrical, plumbing, heating, water heaters, appliances, fireplaces, drainage, roof, walls, floors, attic, crawl spaces, patios.

9.) Survey Certificate: Surveys are not required on strata properties. The bank and CMHC/GENWORTH will require a survey on unattached properties to confirm that the house and/or any outbuildings do not encroach or cross over the property lines. Your lawyer/notary will arrange for the survey, first checking to see if one exists. If a new survey is required the cost is approximately $270. Another option is title insurance, which can be more cost effective.

10.)Insurance Binder: This is a requirement of the bank to confirm adequate insurance to cover any losses that may be incurred on the property. Proof of coverage by way of an insurance binder supplied by the insurance agent or strata corporation as appropriate is necessary and usually costs up to $50 - $150.

This lists only the major items. A more complete list applicable to your particular situation can be obtained for the asking. This information is being provided to assist in the planning of a home purchase. It is not intended to be legal advice and the information set out may not be applicable in all cases. In some situations, a purchaser may be required to pay for other additional expenses such as a second mortgage, an assignment of rents, power of attorney, or independent legal advice.