Understanding Homebuyer Costs
Buying a home involves many financial considerations. Some home buying expenses are one-time costs while others are ongoing commitments. In addition, there are other costs that you may not be aware of or that you may have forgotten to factor into your calculations.
Here is brief description of some of the costs you may need to consider:
Lawyer / Notary Fees
Even a straightforward home purchase requires a lawyer to review the Offer to Purchase, search the title, draw up mortgage documents, register the loan with the land titles office and tend to the closing details. Lawyers fees for a mortgage range widely and will depend on the complexity of the deal. The cost for a home buying is approximately $750.
Home Buying Realtor Fees
In today’s ever changing home market, it is an excellent idea to use the services of a real estate agent. A realtor has the ability to search thousands of potential listings and save you time and money by pin-pointing the properties you will want to consider. Real estate fees are standardized and all fees are paid from the seller of a property. You should expect to pay 7% on the first $100,000 and 3 1/2 % on the remaining balance of a sold property.
Alberta Mortgage Rate Shopper is a free service and does not charge any fees to our clients for arranging mortgages. It should be noted, however, that in some situations mortgage brokers will charge a fee for more complex financing and typically do charge fees for second mortgages. Depending on your situation and the complexity of your financing needs, some fees may apply.
CMHC / GE Insurance
If you have a high-ratio mortgage (less than 25% down payment) your lender will require mortgage loan insurance provided by CMHC or GE Capital.
This insurance is different from the home insurance that you would buy to protect against damage to your home or valuables. CMHC insurance is insurance for the lender to protect against default on payment of the mortgage loan.
The insurance will cost between 0.5% and 3.25% of the total amount of the mortgage. There is also an application fee which will range from $75 to $235 (typically $165 for a new purchase).
The following chart outlines the CMHC / GE premiums:
|CMHC / GE Insurance Premium Rates:|
|Loan Size(% of property value)||Rate (as a % of loan)|
|Up to and including 65%||0.5%|
|Up to and including 75%||0.65%|
|Up to and including 80%||1.00%|
|Up to and including 85%||1.75%|
|Up to and including 90%||2.00%|
|Up to and including 95%||3.25%|
If your loan is not CMHC insured, most lenders will require a property appraisal be done. The appraisal itself is a report designed to determine the current market value of a property.
Some lenders will pick up the cost of an appraisal, while others require the borrower to pay. A basic appraisal for mortgage purposes will cost between $150–$250. Actual cost should be confirmed as it will vary based on the location and size of the property.
Home Inspection Cost
A home inspection is different from an appraisal. A home inspection analyses the structural integrity of a home (foundation, electrical, heating etc.) rather than determining a current market value.
Inspectors are unregulated in many provinces, and fees can range widely. You can expect an approximate cost of $150 – $350 for a home priced under $300,000. Larger, more expensive homes cost more to inspect. A thorough two-hour inspection carried out by an engineer will cost closer to the upper limit. Municipalities can also supply any available inspection reports on the property for a fee.
Taxes are always a certainty! If you have a high-ratio mortgage, some lenders may require that you have your property tax installments added to your mortgage. You can also have a monthly installment paid through the Tax Installment Payment Plan (TIPP)
A good estimate of the annual property taxes due is 1% of the value of a home.
Condominiums charge monthly fees for common-area maintenance such as grounds keeping and carpet cleaning. Fees range widely depending on the type of structure but will generally average between $100 – $400 per month.
An estoppel certificate is a document that outlines a condominium corporation’s financials and legal state. The certificate and supporting documents will cost you up to $50. Your lawyer will usually handle the acquisition of these documents. (Does not apply in Quebec.)
Your lender will require an up-to-date survey. Ask the vendor (seller) to provide one as a condition in your Offer to Purchase, otherwise you will have to pay to have one done. The cost of a new survey can be upwards of $500.