Closing Costs In BC

Closing Costs in BC

Here is an overview of the types of closing costs you may incur on your loan. Some are one-time fees, while others reoccur over the life of the loan.

Appraisal Fee: This is a one-time fee that pays for an appraisal, which is a statement of property value viewed by the lender. The appraisal is made by an independent fee appraiser and can cost a standard $300 to $450, or much more, depending on the home's size and location.  The bank may pay this expense.

Property Transfer Tax:  This tax is payable on the purchase of all real property in B.C. The tax is 1% of the purchase price up to $200,000 and 2% on any amount over $200,000.  There does exist a FIRST TIME HOME BUYERS exemption from the tax.

Harmonized Sales Tax: HST of 12% is payable on the purchase of any new home. A Buyer is entitled to a GST rebate of up to $26,000 if the Buyer will be moving into the new home and making the home his or her permanent residence. Consult with your lawyer about your circumstance.

Mortgage Loan Insurance: Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protects lenders against mortgage default, and enables consumers to purchase homes with as little as 5% down payment — with interest rates comparable to those with a 20% down payment.

To obtain mortgage loan insurance, lenders pay an insurance premium. Typically, your lender will pass this cost on to you. The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage. The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.

Mortgage loan insurance is not to be confused with mortgage life insurance which guarantees that your remaining mortgage at the time of your death will not be a burden to your estate.

Insurance Binder: This is a requirement by the bank or trust company to sure that the Buyer has arranged fire insurance on the new home. Proof of insurance coverage by way of an insurance binder is necessary and typically will cost about $75,00.

Legal Fees: This will be the amount of fees paint to the Buyer's lawyer or notary. You should budget approximately $800.00 for this service.  Disbursements refer to any out of pocket expenses incurred by the lawyer on your behalf - land title searches, tax searches, courier costs, photocopies, filing fees.

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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.  We recommend each client consult with their lender and lawyer early in the process to confirm the actual cash requirements necessary to buy a home.