Are you planning to purchase a new home?
Whether you’re a first-time buyer or a seasoned investor, it’s crucial to have a comprehensive understanding of the financial aspects associated with buying a property. In addition to the purchase price, there are several costs involved in the home buying process that you need to be aware of. In this blog post, I will break down these expenses, providing you with valuable insights and accurate figures to help you plan your budget effectively.
Property Transfer Tax (PTT)
When acquiring real estate in British Columbia, you are required to pay the Property Transfer Tax (PTT). This provincial tax is calculated as a percentage of the property’s purchase price & would be the biggest expense on top of the purchase price.
The rate is 1% on the first $200,000, 2% on the portion of the fair market value greater than $200,000 and up to and including $2 million, and 3% on the portion of the fair market value greater than $2 million.
Home Inspection
Before finalizing your purchase, it’s highly recommended to invest in a professional home inspection. This crucial step ensures that you are fully aware of any potential issues with the property and allows you to make an informed decision. Home inspection costs typically range from $350 to $1,000, depending on the size and complexity of the property.
Legal Fees
Engaging the services of a real estate lawyer or notary public is essential to ensure a smooth transaction. These professionals handle the legal aspects of the purchase, including document preparation, title searches, and registration. Legal fees can range from $1,000 to $3,000, depending on the complexity of the transaction.
Mortgage Default Insurance
If your down payment is less than 20% of the purchase price, you will likely need to obtain mortgage default insurance. The cost of this insurance depends on the size of your downpayment and can range from 0.6% to 4.50% of the mortgage amount.
Home Insurance
Securing home insurance is necessary to protect your investment. The cost of insurance varies depending on factors such as the property’s location, age and value. It’s advisable to obtain quotes from different insurance providers to find the best coverage at a competitive rate. Typically, home insurance can range from $500 to $2,000 per year.
Moving Costs
Don’t overlook the expenses associated with moving. Whether you hire professional movers or handle the move yourself, there will be costs involved, including packing materials, truck rentals and labor. The specific costs depend on the distance of the move and the volume of your belongings. On average, moving costs can range from $500 to $3,000 or more.
Property Tax Adjustments
When purchasing a property, you will need to account for property tax adjustments. This adjustment ensures that you pay the property taxes for the period during which you will be the owner. The amount owed varies depending on the time of year and the property’s assessed value.
Strata or Condo Fees
If you’re buying a strata or condo property, monthly maintenance fees will apply. These fees cover shared expenses such as building maintenance, landscaping and amenities. It’s crucial to review the strata or condo bylaws to understand the fee structure and factor them into your monthly budget. The fees can range from $200 to $800 or more per month, depending on the property size, building condition and its amenities.
By considering these various costs associated with buying a home, you’ll be better equipped to plan your budget effectively and avoid any unexpected financial surprises during the process. Please contact me, I’d be happy to guide you through the process and provide accurate estimates based on your specific situation.
Happy home buying!