Setting out a budget is a fairly obvious and important step when deciding to purchase a home, but there are several cash expenses that you may not think of that need to be taken into account when planning your budget.
Here’s a quick guide to help you calculate all of the upfront costs that you could incur when buying a home (for this example, let’s assume the purchase price of the home is $1,000,000 and it is a BRAND NEW property).
Purchase Price of the Home: $1,000,000
The deposit is typically 5% of the purchase price of the home and is to be paid at the time the offer is made, or, if there are subjects on your offer, it is to be paid within 24 hours of subject removals*.
*Some exceptions may apply.
Down Payment: $ 150,000
In this scenario with a $50,000 deposit, the remainder would be $150,000 down payment, to be paid at the time of Completion.
For any properties valued $1,000,000+, a min. 20% down payment is required. Properties valued between $500,000 – $1,000,000, a 10% down payment is required and any properties below $500,000 require a 5% down payment.
Property Transfer Tax: $ 18,000
1% on the 1st $200,000; 2% on the fair market value greater than $200,000 and up to $2,000,000
Appraisal Fees: $ 300 – $ 450 +gst
Before getting approved for a mortgage, your lender may require a property appraisal and will sometimes charge you for the appraisal, however sometimes they will cover the cost.
Home Inspection Fees: $ 500 – $ 950
The cost of a home inspection will vary depending on the size of the property. Some inspectors may charge additional fees for a laneway house, heritage homes, homes with a crawlspace or additional suite, as the inspection then becomes more complex.
Legal Fees: $ 800 – $ 1,000
A Lawyer or Notary Public is hired to ensure proper transfer of the title. In some cases, if the transaction is more complex a Lawyer may be required over a Notary and could charge additional fees.
Moving Costs: $ 500 – $ 1,000
If you decide to hire a moving truck, the moving costs will vary depending on the amount and complexity of the furniture that requires moving.
Move-In Fee: $ 200 – $ 250
If you are moving into a condo, the Strata will typically charge a move-in fee to book the elevator which can range in price depending on the strata property.
GST: $ 50,000
In this example, the property is brand new and therefore requires the buyer to pay 5% GST. NOTE: GST is not applicable to a home that has been previously owned, unless the original buyer deferred the taxes. This is uncommon in the Greater Vancouver Area, but it does happen in some circumstances, so be sure to find out early on if the GST has been paid.
Utility Hook Ups: $ 20.00 – $ 100.00
This highly depends on what you require to be hooked up, as some condos have hot water, electricity and gas included in their strata fees and don’t require you to have anything hooked up. It’s a good idea to know ahead of time what will be required for you to have hooked-up so that you can include this into your budget.
Adjustments: $ Undetermined
Adjustments are made at the time of Completion on the property and include any prepaid bills from the Seller such as property taxes, utility bills, and/or rent. The Buyer would reimburse the Seller for the portion they paid but will not use. ie. If the Seller paid the property tax for all of 2018 and the Buyer moved in March 31st, the Buyer would reimburse the Seller for the months of April – December.
Home Insurance: $ 50 – $ 200/month
Most lenders require the Buyer to have home insurance at the time of Completion. The price will be dependent on the size and age of your property.
Fire & Liability Insurance: $ 20 – $ 100/month
(Most lenders require the Buyer to have Fire & Liability insurance at the time of Completion. The price will be dependent on the assessed value of your property, the value of your personal items, and the cost of your living expenses).
The views expressed are those of the author, Leslie McGuire, an Oakwyn Realty Ltd. REALTOR®, and do not necessarily reflect those of Oakwyn Realty Ltd.. It is provided as a general source of information only and should not be considered personal investment advice or a solicitation.