What Buying a Home Really Costs - A simple breakdown of purchasing costs
You might think the cost of purchasing a home is obvious, but sometimes, wrapped up in the excitement, some expenses get forgotten or are just not something you would have ever thought about. To help you cross your "T's" and dot your "I's," I have put together a list of costs and considerations to help you better understand the expenses associated with the home buying process.
Get cost acquainted
Before making an offer, it is wise to consider all potential expenses to ensure you are not left feeling surprised and overwhelmed. I have provided additional links below to allow you to delve a little deeper into understanding those costs.
If you are a first time home buyer, find out if you qualify for the BC First Time Home Buyer's grant by checking out this link http://bit.ly/2Tb0vKx.
Interested in finding how much you need for a downpayment and what your monthly payment obligation will be? Follow this link here: http://bit.ly/3ailwsw.
The links above are a great place to start when assessing what you can afford. Once you have an idea of where you stand, book an appointment with a mortgage broker or bank to discuss pre-approval.
Making an offer to purchase
You have finally found the 'one' and have an accepted offer. That offer may include subjects like:
- A home inspection.
- An appraisal
- Land survey
- Home Insurance policy
Tip: Get multiple quotes from different home insurance companies and interview at least 3 home inspectors.
Property Transfer Tax. What is it, and how much?
In British Columbia, property transfer tax, and prorated property taxes are paid on closing day. This payment goes to the municipality where your new home is located and is paid annually after that.
To get an estimated property transfer tax cost, follow this link: http://bit.ly/2I9urjG
Other costs to consider
- GST if your home is a new build, commercial or rental/Airbnb.
- City or strata fees.
- Lawyer/notary fees for registering the property and transferring the land title.
Tip: Reach out to your accountant to verify if your new home purchase might include GST, Speculation & Vacancy Tax or Foreign Buyers Tax.
Are you hiring a moving company or doing it yourself? Are you planning any renovations and have those expenses been considered? Don't forget, TV, phone, internet, heat and electricity. Creating a checklist is a great way to ensure you don't miss anything and can track your expenses to make sure you stay on budget.
Breaking It All Down
Here are the costs we have discussed so far to help narrow it down for you. The calculation below is based on a $450,000 single-family, detached home with the first time home buyer grant. Please note, these are rough estimates, and I recommend meeting with a mortgage specialist to discuss exact amounts, as every situation is a little bit different.
- Down payment (10% with first time home buyer grant): $45,000
- Monthly mortgage payments (25-year amortization on a 5-year fixed term): $1846 per month
- Home Inspection: $500
- Septic Inspection (not applicable for all households) $500
- WETT Inspection (older wood stove): $150
- Appraisal: $300 (if lender requirement)
- Insurance: $1000 per year
- Property transfer tax (rebated at Lawyer's with first time home buyer's grant): $7000
- Property taxes: $3696 per year
- City or strata fees: $300 per month
- Lawyer/notary fees: $1200
- Other (moving, furniture, utilities, repairs): $5000
Total after closing day: $52,192 (Reminder: this is after the first time home buyer's grant).
The total you can expect month over month: approx $2504 + utilities.
***Disclaimer: these are rough estimates. I recommend meeting with a mortgage specialist to discuss the exact amounts.