Tricity Living

Once you have figured out the home price range you can afford and the type of mortgage you qualify for, you will need to calculate all of the associated costs of the transaction to make sure you are financially ready.  You will need to plan ahead to cover the many "up-front costs" of buying a home. Timing is important to help make sure things go smoothly.  You will want to consider the following in your budgets:

Mortgage Loan Insurance Premium - If yours is a high-ratio mortgage (less than 20% down payment), your lender may need mortgage loan insurance. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing.

Appraisal Fee - Your mortgage lender may require that the property be appraised at your expense. An appraisal is an estimate of the value of the home. The cost is usually between $250 and $350 and must be paid when you contract for those services

Deposit - This is part of your down payment and must be paid when you make an Offer to Purchase. The cost varies depending on the area, but it may be up to 5% of the purchase price. If you wish to make a down payment of 5% and you give a deposit of 5%, then your down payment is considered to be made.

Down Payment - With mortgage loan insurance from CMHC you can own your home with little or no down payment. At least 20% of the purchase price is usually required for a conventional mortgage.

Status Certificate Fee - This applies if you are buying a condominium or strata unit and could cost up to $100.

Home Inspection Fee - Remember that this may be a condition of your Offer to Purchase. A home inspection is a report on the condition of the home and generally ranges around $500, depending on the complexities of the inspection. For example, it may be more costly to inspect a home that has large square footage, one that is expensive or one where contaminants such as pyrite, radon gas or urea-formaldehyde are suspected.

Land Registration Fees - Land Transfer Tax, Deed Registration Fee, Tariff or Property Purchases Tax).You may have to pay this provincial or municipal charge upon closing in some provinces. The cost is a percentage of the property's purchase price and may vary. Check with your lawyer/notary to see what the current rates are.

Prepaid Property Taxes and/or Utility Bills - To reimburse the vendor for pre-paid costs such as property taxes, filling the oil tank, etc.

Property Insurance - The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing the structure of your home and its contents. Property insurance must be in place on closing day.

Survey or Certificate of Location Cost - The mortgage lender may ask for an up-to-date survey or certificate of location prior to finalizing the mortgage loan. If the seller does not have one or does not agree to get one, you will have to pay for it yourself. It can cost in the $1,000 to $2,000 range.

Water Quality Inspection - If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. You can negotiate these costs with the vendor and list them in your Offer to Purchase.

Legal Fees and Disbursements - These fees must be paid upon closing and cost a minimum of $500 (plus GST/HST).  Your lawyer/notary will also bill you direct costs to check on the legal status of your property.

Title Insurance - Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property. If you feel you cannot cover all of the up-front costs, you can ask your lender for a loan. Remember that payment for this loan amount, based on a 12-month repayment period, will have to be included in your Total Debt Service ratio calculation.