Real Estate Closing Costs – What Are They and How Much Will They Cost?
Real estate closing costs include the legal and administrative fees and disbursements associated with buying a home. It is important home buyers understand each cost so they can appropriately budget for these expenses which are payable at closing.
Mortgage Default Insurance
You are required to make at least a 5% down payment when you purchase a home as of October 15, 2008. Home purchasers who borrow more than 80% of the money needed for a mortgage will be required to purchase mortgage insurance through either the Canada Mortgage and Housing Corporation or a private company such as Genworth Financial Canada or AIG. The insurance premium is wrapped into the principle amount of the mortgage. For example, if you mortgage is 300K and your insurance premium is assessed at 2%, then your total principle amount is 306K.
Fire Insurance
Be sure to contact your insurance agent early, as your mortgage lender requires you have fire insurance effective the date of legal possession of your home. Different companies have different criteria for insuring your home and you need to be sure the company insures the type of dwelling you will live in. Some companies will insist on proof of a home inspection prior to issuing a policy.
Legal and/or Notary Fees
It’s a good idea to have your real estate closing handled by an attorney or a notary. The fees for this service vary widely, but plan on $650 as an average cost, though you may pay as much as $800.
Land Transfer Taxes
All property purchased in British Columbia is subject to a provincial transfer tax. The tax amount equals 1% of the first $200,000 plus 2% on the remaining balance. Some exemptions may apply if you are a first-time homebuyer, and we can answer any questions you have regarding whether or not you qualify for any exemptions.
