Anticipate the Cost

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What types of mortgages are available?

Conventional ‘Low Ratio’

The mortgage loan amount is equal or less than 80% of the lesser of: a) what the appraiser states is the value of the home, or b) what it actually costs to buy. In other words, you have a down payment of 20% or more.

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Conventional High Ratio

Insured – ‘High Ratio’ – The mortgage loan amount is greater than 80% but less than 95% of the lesser of: a) what the appraiser states is the value of the home, or b) what it actually costs to buy. In other words, you have less than 20% of a down payment. High ratio mortgages can be insured by Genworth Financial Canada, a private insurer, or Canada Mortgage and Housing Corporation (CMHC), which operate under the National Housing Act (NHA).

Mortgage Default Insurance

This type of insurance is required on all mortgage loans in excess of 80% of the appraised property value. Its purpose is to insure that the lender will not lose any money if you cannot make your mortgage payments and the value of your property is not sufficient to repay your mortgage debt. The insurance premium is paid to the lender. The fee is a variable percentage of the loan value. The premium is usually added to the loan amount, and paid for over the term of the loan.

Mortgage Application Fee

Lending institutions may charge a mortgage application fee. This application fee may vary between lending institutions.

Appraisal Fee

If your loan is not insured, your lender may require a property appraisal at your expense. The cost is is usually between $250 and up.

Survey Fee

Your lender will require an up-to-date survey. If the Seller does not have one, you will need to hire a surveyor and have one completed.

Life & Disability Mortgage Insurance

At your option, you may purchase insurance that will ensure that your outstanding mortgage balance is paid if you die or become disabled.

Fire & Liability Insurance

Who is Paid First

The mortgage lender will insist that you purchase an insurance policy which guarantees that, in the event of fire or other natural catastrophe, the lender will receive the balance owing on the mortgage loan before you receive any insurance proceeds.

Your Stuff

In addition, this type of home owner policy may include add on insurance for your contents.

Condo’s are Different

You will want to pay particular attention to your insurance package if you have bought a condo. Make sure that you have insurance to cover the deductible on the strata policy. It is not unusual to find a substantial deductible $5000 and up for the strata’s policy. Should your unit cause a flood that results in damage to the units below, the strata policy may cover the damage, but the that substantial deductible may be your responsibility. Be sure to ask your general insurance agent about clarification.

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Taxes

Taxes – Harmonized Sales Tax (HST)

The 12% Harmonized Services Tax applies to new housing. It is important that you consult with an accountant to ensure you under stand the amount of this liability. You may be entitle to a rebate.

There is no HST on resale housing.

Taxes – Property Transfer Tax

In B.C. there is a Property Transfer Tax on all real estate. That amount is calculated as is 1% to $100,000 and 2% on the remainder. This is due when you pay your funds to the lawyer. First time buyers may qualify for an reduction under the provincial guidelines. Here is the outline of the First Time Home Buyer’s Program.

Property Tax

You will be responsible for the Municipal property tax from the date you take possession until the end of the year. This amount is calculated as a per diem by your lawyer. Your Realtor® can provide you with the annual amount.

Lawyer’s Fees

A Lawyer will review the Contract of Purchase and Sale, search and confirm the title to ensure the sellers are the owners, draw up mortgage documents and tend to the closing details. Fees will be at least $750 plus Land Title, and other miscellaneous disbursements.

Moving Costs

Moving companies charge between $100 per hour and more for a van and 2-3 movers. Plan your move in dates to save. Rates are always higher in the middle, and the end of the month.

Condominium Fees

This a monthly fee for services provided at your new condominium. The services may include such things as management, building insurance, garbage or gardening. In British Columbia the document referred to as ‘Form B’ which originates with the property manager, must be provided to you for your perusal. It will contain the fee details.

Home Inspection Fee

Expect this service fee to range from $250 and up. This variance is dependent upon the number of square feet in the structure and whether it is a house or a condo.

Maintenance Costs – Single Family Home

You may want to start a separate maintenance fund, particularly if you’re buying an older home, by setting aside $500-1000 and adding to it regularly.

Renovation Costs

Renovations always take longer than expected, and may cost more than you anticipate.

Service Connection Charges

Expect to pay connection fees for your phone, cable, internet and hydro.