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Residential Mortgage Closing
Costs
We have compiled a list of common mortgage closing
costs associated with typical residential mortgages.
Lenders generally require proof 1.5% of the purchase
price in funds available for closing costs on typical
residential purchases.
Legal Fees & Disbursements A Notary or a Lawyer
will finalize the mortgage documents and register
them on the Land Title for you. Since the visit to your
lawyer is the last step in the entire process, it's
extremely important that this is handled with care.
Your lawyer or notary will charge you a fee for
drawing up the mortgage and conveyance of title. The
amount of the fee will depend on the individual that
you use and the complexity of the mortgage and
disbursements. The typical cost is $650 to $1,200.
Property Transfer Tax The British Columbia
Provincial Government imposes a Property Transfer
Tax when you purchase a home and transfer an
interest in title. The Property Transfer Tax must be
paid at the time the Land Title is registered. British
Columbia Property Transfer Tax is calculated at 1.00%
of the First $200,000 and 2.00% of the remaining
purchase price.
There are situations where you may be exempt from
paying Property Transfer Tax which include but not
limited to exemptions for first time home buyers and
transfers between family members. Some conditions
apply to exemptions. For up-to-date Property Transfer
Tax information please visit the BC Governments
website.
Title Insurance Most lenders will require Title
Insurance to be purchased at closing. Title Insurance
protects both you and the lender from a number of
items including fraud and forgery against fraudulently
registered mortgages on your title, loss resulting from
previous renovations without a permit, and many
more items. Title Insurance typically costs between
$150 to $300.
Land Survey A Land Survey may be required by a
lender. A current Land Survey will show the position of
the home on the property and include any easements
associated with the property. Land Survey costs will
vary based on land size and location.
Property Appraisal A Property Appraisals may be
required to determine the fair market value or lending
value of the property you are purchasing or
refinancing. This will determine the maximum loan-to-
value of your mortgage. Generally all private sales and
estate sales will require an appraisal. Appraisals for a
typical single-family home range from $275 to $375.
Home Insurance Lenders will require that insurance
be placed on the property with the lender as the
recipient of the insurance to pay off the mortgage
balance from the insurance proceeds. Insurance will
need to be in place at the time of closing and the
Solicitor will require proof of insurance. Insurance
costs will vary and it is recommended that once a
lender commitment is received that you review the
lenders requirements prior to placing the insurance as
some lender may or may not require earthquake
coverage.
Property Tax Adjustment Property Tax Adjustment
will vary based on the properties tax owed or paid by
the current owners. Adjustments will be made for
either you or the current owner to pay their share of
the property tax at closing. Property taxes are
commonly due on July 1st of each year and are for the
current calendar year thus if a purchase is made after
July 1st the purchaser will owe the previous owner an
adjustment up to December 31st.
Property Tax Hold Back If a lender is collecting
property taxes on your behalf there may be a
Property Tax Hold Back which will be equivalent to the
months that have lapsed since the previous July to the
closing date of the mortgage. This is to ensure there
are enough funds to cover the property taxes for the
year which are due each July 1st and are calculated for
the calendar year
Sales Tax Currently GST is charged on new homes in
British Columbia. Rebates may be available and most
lenders will finance net-GST. For more information
please visit Canada Revenue Agency's web page on
New Housing Rebates.
Home Inspection This is probably the best $300-
$500 you will ever spend. Typically Lenders will not
require you to obtain a home inspection however it is
highly recommended that you have a home inspected
whenever possible, so that you're completely
informed about what you can't see behind the walls.
There may be mould, old wiring or leaks that will cost
you a lot to fix down the road.
Mortgage Fees Mortgage Brokerage and/or a
Lender fees on a typical mortgage will not apply.
However, in the case of a more complex or in the case
of private financing fees may apply. The fees are
disclosed upfront and outlined in the mortgage
commitment prior to closing.
Other Costs to Consider Other costs may apply
when purchasing a home. Costs associated with the
mortgage will be presented prior to your mortgage
closing date. Other costs to consider are strata fees,
moving expenses, utility hook-ups, change of address
expenses and more.