Buying a home is likely the biggest investment you'll ever make. So before losing your head over the perfect property this spring, try to get a handle on all the costs to protect your wallet.
I asked Jason Neumann, a Realtor with Century 21 Assurance Realty Ltd. in Kelowna B.C., to share five fees home buyers should not miss.
1. Home Inspection
Don't scrimp on your home inspection to save a little cash, advises Neumann. "It is a must-have service in my opinion, only because at the end of the day you could be buying a $400,000 house with a cracked foundation."
Home inspection rates can vary depending on location and property. Some inspectors charge $100 an hour while others bill by house size, and don't forget to add HST or GST to the total inspection tab. To be safe, budget around $400 to cover this essential cost.
"I try to advise the buyers: If you can spare the three hours, go through the process with your home inspector because they love to show you what they're finding," he says.
2. Legal Fees
Lawyers often draw up mortgage documents, deal with disbursements, search titles, tend to closing details, and more. Your total legal bill will depend on your location, the complexity of the sale, and the type of property being purchased. To get a handle on your legal fees, be sure to ask your lawyer for a solid estimate before buying a property since fees can range from $1,000 to well over $2,500.
3. Property Appraisal
Your lender may require a property appraisal at your expense, or could include this fee with your mortgage package. If you're paying out of pocket, expect to fork over at least $150.
"We find many banks are ordering appraisals regardless of list price or the last time one was done," says Neumann. "The appraisal is mandatory now because banks want to make sure they can qualify the amount, that it's substantiated, and there's not going to be a $100,000 'oops' in the equation."
4. Transfer Tax
Most Canadian home buyers should budget for the dreaded 'land transfer' or 'property transfer' tax -- this one could cost you up to two per cent of the market value of your new home. Transfer taxes are not charged in Alberta or Saskatchewan, but residents of Ontario and British Columbia should be prepared to pay around $5,000 for a modest home.
But exemptions are possible.
"A legitimate first-time home buyer [in B.C.] can get exemptions from the property transfer tax up to a maximum of $425,000," says Neumann.
And first-time home buyers in Ontario may qualify for the 'Land Transfer Tax Refund' by meeting these qualifications. See property transfer taxes across Canada for the graduated rates in your area.
5. Survey Certificate
Count yourself lucky if the seller has an up-to-date survey on record -- all other buyers should plan on spending at least $300 if your lender requires one, says Neumann.