When it comes to buying a home everyone thinks they understand the amount of money involved, but aside from the purchase price there are a number of additional costs associated with buying real estate that can trip buyers up — especially first time home buyers.
It helps to be prepared and know what these costs will be: otherwise there could be a few unexpected surprises during the already stressful closing process.
Additional real estate costs beyond the negotiated purchase price often include:
Sales Tax: In British Columbia HST is charged on some kinds of property, including brand new homes and condos, while other real estate will be exempt from sales taxes. Make sure to know what taxes apply on which homes when you’re considering making an offer.
Property Survey: Some mortgage lenders may require an updated property survey certificate before finalizing your mortgage loan. A property survey verifies the boundaries of your property and includes information on the measurements, structures, easements, rights of way and any encroachments. If the seller doesn’t have a recent one, the buyer may have to pay to get one done.
Property Taxes: Depending on the amount of the property tax and the time of year a home is purchased, buyers may have to pay out a portion of the property tax right away or reimburse the current owners for the amount they’ve already paid.
Property Purchase Tax: A land registration tax payable to the Province, this is a percentage of the purchase price of the home.
Appraisal Fees: Many mortgage brokers will require a home appraisal before guaranteeing your loan on a particular home. It’s important to check with your broker to see if they have an approved appraiser list.
Home Inspection: Very few buyers close before getting a third party home inspection to evaluate the structural condition of the property. A proper home inspection before closing an offer is critical and can identify any major repairs that need to be done that may impact the negotiated price.
Legal Fees: You must hire a real estate lawyer when buying a home to handle the legal transaction of property, including reviewing the terms of offer, conducting a title search, registering a new title, determining costs, and preparing and signing a mortgage.
Moving Costs: It’s important to factor in the cost of moving when buying a home. If you’re staying within the same city moving costs may be minimal, but if you’re relocating to a new city or Province the dollars can increase quickly.
Appliances: In some cases appliances are not included in the purchase agreement. If they aren’t included you will need to factor the purchase of items such as a stove, refrigerator, dishwasher and laundry appliances into your home buying budget.
Property Needs: Inevitably there will be things you need in your new home during the first year that you didn’t think of or anticipate, and it’s a good idea to have a slush fund for these unexpected expenses. For those making the switch from condos or apartments to a house these costs often include a wide variety of yard maintenance equipment and supplies. These expenses could also include new carpet, paint or home renovations that should be done prior to moving in.