E-mail me: mlummis@RealEstateHalifax.ca |
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NOTE: Figures given are estimates only, and will vary according to
The initial costs of purchasing of a home can add up surprisingly
Be careful not to overlook sale closing costs and extras associated with
your actual home purchase. For a resale home, these extras can easily
add another 1.5% to 2% on top of the purchase price, so be sure to plan
for these fees so that you're not caught by surprise. Each of these
costs is detailed below.
Inspection Fee $300
You'll want to have an inspection performed by a professional building
inspector before finalizing your offer to purchase. The inspection may
bring to light areas where repairs or maintenance are required and will
assure you that the house is structurally sound. Usually the inspector
will provide you with a written report. If they don't, then ask for one.
Mortgage Application Fee $250
(many banks will waive this fee if you finance with them)
Some financial institutions charge a mortgage application fee to process
your application. If your request for a mortgage is turned down, most
will return the application fee to you. This application fee is also
charged by some institutions each time your mortgage is renewed.
Appraisal Fee $250
The financial institution extending the mortgage will hire an appraiser
to ensure that the property you are buying meets its criteria for a
mortgage. You are generally responsible for the cost of the appraisal.
Legal Fees $800
You will be required to retain a lawyer or notary to act for you in the
purchase and mortgaging of the property, and you will be responsible for
payment of the legal fees and disbursements. Fees for these services may
vary significantly, so shop around before making your decision.
Deed Transfer Tax 1 1/2% of the purchase price
Sometimes known as the "Welcome Tax", most provinces levy a
one-time tax based on a percentage of the purchase price of the
Other Closing Costs
When buying a resale home, the purchase price is always payable
"subject to the usual adjustments" at closing.
This means that any amount that the seller has already prepaid will be
adjusted so that the home buyer pays the excess amount back to the
seller, and vice versa.
These adjustments can include:
- municipal property and school taxes
- monthly condominium maintenance fees
- first and last month's rental for rental properties that may be in
- utilities, such as water and fuel oil, including HST.
- Interest Adjustment Costs
Interest adjustment dates can be a potential cash flow killer so please
take note of your lender's policy.
Most lenders expect the first mortgage payment one month after closing
the purchase - however, if you close mid-month, some lenders expect the
first payment at the beginning of the next month, two weeks before you
would normally expect. Or they charge a pro-rated interest to make up
When arranging your mortgage, ask how interest is collected to the
interest adjustment date. By asking the right questions, you can avoid a
cash flow crisis on closing.
All homes must have adequate insurance coverage against fire, and other
risks of loss, theft and liability. You may find that insurance on your
new home is more costly than your previous residence. Your mortgage
lender requires that you provide your lawyer or notary with proof that
your insurance is in place by the closing date.
Whether the move into your new home is a do-it-yourself affair or you
hire movers, there will certainly be costs involved. If you plan to move
during the peak spring/summer months, you should contract for service
two to three months in advance if possible.
Depending on the type of mortgage you choose there could be additional costs, i.e., default insurance
premiums (for low down payment mortgages), plus the cost of a survey of
the property (many times this is not required by the bank).
Mark Lummis. Any reproduction of this site is prohibited.
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*excerpts used in this page were taken from http://www.royalbank.ca/
and combined with local data.