Costs Involved in Purchasing a New Home
If you are planning to purchase a home with less than 20% as a down payment the insurers may ask that you have an additional 1% – 1.5% of the purchase price of your home set aside to cover the cost of purchasing a new home. Usually this money must come from your own resources and is over and above the required minimum down payment of 5%. We have provided a list of typical costs involved in purchasing a new home. If you have any questions please do not hesitate to contact us, we would be happy to help.
Lawyer fees vary widely across Canada. You should be able to find a lawyer in the price range of $1000 – $1500 plus disbursements for a purchase and $600 – $900 for a refinance. The best thing to do is get a referral to a lawyer from family or friends, your mortgage broker or realtor, this way you will know that they are experienced. Then call them to find out what they charge and make sure they are available the week before your possession date to handle the sale. Also, please remember the old saying that you often get what you pay for. We work closely with several lawyers and would be happy to refer them to you.
This is a tax payable to the Provincial Government by the purchaser upon the transfer of title. Not all provinces have a Land Transfer Tax. Please check with your Realtor or Lawyer for your province’s fees. Alberta does not currently have a land transfer tax.
These are fees that are paid to the Provincial Government for recording the transfer of title and mortgage registration with the local authorities. These prices are based on the purchase price of the home and also vary across Canada.
Currently, in Canada, there are three providers of default mortgage insurance. CMHC, Genworth Canada and Canada Guarantee. It is usually up to the discretion of the lender to choose the provider. These insurers provide people in Canada to purchase their homes with less than a 20% down payment. All three insurers charge a sliding scale of fees depending on the amount of down payment being put towards the purchase and the amortization. This fee can be paid up front or added to the mortgage. Your mortgage broker will be able to give you a quote based on your down payment and purchase price.
At the time of the sale, your lawyer will determine if the taxes have been paid up to date or in advance by the seller. If the seller has paid their property taxes in advance your lawyer will determine how much the buyer must compensate the seller. If they are not up to date the seller is required to pay them up to the date of your possession. You must be prepared to pay an adjustment at the time of property transfer. Your lawyer will be able to give you the details of the amount required, if any. Also, if the lender is collecting property taxes for you they may require a deposit up front which you would pay at the lawyer’s office.
If the lender requests an appraisal of your property, it is your responsibility to cover the cost. The fees usually range between $250 – $350 unless your property is exceptional. If your mortgage is high ratio and insured by CMHC, Genworth Canada or Canada Guarantee than they will cover this cost for you.
This is a very wise choice when buying a new property. It is a report that will state the condition of the property prior to firming up the deal. The majority of reports will indicate any problems and provide a cost to repair them. Qualifications for home inspectors may vary as well as the cost associated with this. Please verify the inspectors experience before making your selection as a person does not have to be licensed to say they are a home inspector. Most realtors have great referrals for home inspectors. A home inspection is not required by most lenders, but, is still highly recommended.
Many lenders are requiring title insurance upon closing. Title insurance protects against any defects in the registration of the home. The cost averages around $200 but is based on the value of the home. There is also a free title insurance offered by the Alberta Law Society called Western Protocol. Not all lenders or lawyers use this so please ask them up front. The lawyer will be able to give you the exact cost of title insurance if required. There is also an add on available to this that will protect you against title theft. Please discuss these options with your lawyer.