These various charges can add up and for the most part they are all legally required payments in buying a property. These payments include:
1. Legal fees: Legal representation is important. Most legal fees include searching the title of a property, arranging a property survey if necessary, and handling other disbursements as required.
2. Mortgage insurance and application fee: This type of insurance is required on all mortgage loans in excess of 75% of the appraised property value. Its purpose is to ensure that the lender will not lose 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 and ranges from % to 3.75% of the loan value; however, in most cases this premium is added to the loan amount, and paid for over the term of the loan.
3. Property insurance: this insurance covers the replacement value of your home and its contents. Most mortgage lenders will require proof that you have this insurance before processing a mortgage. The lending institution may also require an appraisal of the property before approving your loan; the cost may be your responsibility.
4. Home inspection: a professional home inspector knows what to look for and can confirm or add to the information you have gleaned from the REALTOR® or your inspection.
5. Property Transfer Tax Rates. The British Columbia Provincial Government imposes a property purchase tax, which must be paid before any property can be legally transferred to a new owner. The tax is 1% on the first $200,000 of the property value and 2% on any value over $200,000. There are special regulations for first time buyers in B.C.
6. Property Tax: You will have to reimburse the sellers for your share of the year's taxes if they have already paid them in full. Property taxes are calculated from January - December, and are paid in June.
7. HST - How It Affects Your Home Purchase. The Harmonized Sales Tax (HST) came into effect on July 1, 2010. The provincial and federal governments combined the 7% provincial sales tax (PST) and the 5% federal Goods and Services Tax (GST) into the 12% HST. Some of the transition rules can be quite confusing, so talk to your REALTOR® about the specifics of your situation. In the meantime, we hope the following will help you understand the basics of what is, and what is not, subject to the new tax and how it affects your home purchase.
First and foremost, it is important to note that the HST applies to new homes. It does not apply to resale homes.
New Housing Rebate: You may be eligible for a provincial New Housing Rebate if you buy, as your primary residence:
* a new home together with land;
* a new home together with leased land;
* a new mobile home or float home;
* a new home purchased through shares in a housing cooperative; or
* a home constructed or substantially renovated (more than 90%) by the owner-builder.
Buyers of new homes are eligible for a rebate of 71.43% of the provincial portion (7% of the HST’s 12%) of the HST paid on the new home up to a maximum rebate of $26,250. Homes priced at more than $525,000 are eligible for a flat rebate of $26,250. This rebate is limited to primary residences. Recreational property not used as a primary residence does not qualify.
If you buy a presale property and the agreement is dated on or before November 18, 2009 and you take ownership or possession after July 1, 2010, you will not pay the HST and will not be eligible for a New Housing Rebate. You will pay the GST. If the agreement is dated after November 18, 2009 and you take ownership or possession after July 1, 2010, you will pay the HST and may be eligible for the New Housing Rebate.
Buying either a new or a resale home - The 12% HST is now charged on a range of goods and services including:
* home renovations;
* energy efficient appliances, insulation, windows and doors;
* heating and electricity bills, telephone, cable;
* closing costs such as appraisals and inspections;
* moving costs; and
* REALTOR® fees or commissions – note that the HST will apply to REALTOR® services performed on or after July 1, 2010. If 90% or more of the services were performed before July 1, 2010, the HST will not apply.
8. Extra charges: the Lending institution may also require a Survey. You will be responsible for the cost.
9. Hook-ups: there may be hook-up charges required for appliances and services such as telephone, TV cable, hydro and other utilities.
10. Moving costs: don't forget the basic costs involved in moving from your old place into your new home, particularly if you use a professional moving company.
Just remember to add the closing costs to your financial plan when saving to buy a home. If you
need a list of legal advisors who specialize in real estate please Contact me! 250-893-1016 (Direct).
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