Realtor’s Insight

Hello again!

Summer is well over and fall has defiantly set in, thought it was time to get this article up and going once again. Any one wanting to ask a Real Estate question please do not hesitate to do so. You can by submitting questions to me in writing to Brenda Banham Dawson Creek Realty Ltd.: e-mail fax: 250-242-3256 or mail Box 1769 Tumbler Ridge, BC V0C 2W0.

A question I get asked all the time is in regards to closing costs. There are a number of costs that are required to be paid upon closing a property transaction; remember to budget for these costs so there are no surprises;

Property Transfer Tax: A tax imposed by the BC government. It is a tax that is payable before a property can be legally transferred to a new owner. The tax is 1% on the first $200,000 and 2% on the amount exceeding $200,000 There are some exemptions so be sure to consult your Notary Public or Lawyer.

Goods & Services Tax: A new home may be subject to 6% GST on the purchase price. However, if the home is under $350,000 a rebate will reduce the GST paid to 4.48% of the purchase price. If the price is over $350,000, the net GST to be paid increases until it is a full 6% at amounts over $450,000. The GST will also be applied to the Seller for Real Estate Fees and to both the Buyer and Seller for Notary Public or Lawyer fees.

Property Tax: The Buyer is responsible for their portion of the property tax at purchase. Property taxes are from January 1 through to December 31 payable in July. If, for example, you purchase a property August 16 the Buyer would be responsible to pay the Seller the property from August 16 to December 31. Your Notary Public or Lawyer will adjust the property tax and record it on the Statement of adjustments that you will be responsible to pay out.

Appraisal Fee and Survey Fee: There are some financial institutions that require the Buyer to have an appraisal of the property done by a professional; the Buyer may be required to pay for this service. This also holds true for a survey of the property.

Mortgage Application Fee: Some lenders may charge a mortgage application fee. The fee varies between lenders, be sure to ask your financial institution about this fee.

Mortgage default Insurance: required on all mortgage loans in excess of 75% of the appraised property value. Its purpose is to insure that the lender will not lose any money if the Buyer cannot make the mortgage payments and the value of the property is not sufficient to repay the mortgage debt. The insurance premium is paid to the lender and ranges from .5% to 3.75% of the loan value. In most cases the premium is added to the loan amount and paid for over the term of the loan.

Life & Disability Mortgage Insurance: This type of insurance is not mandatory. You may purchase the insurance which will ensure that your outstanding mortgage balance is paid if you die or become disabled.

Fire & Liability Insurance: Your lender will insist that you obtain an insurance policy which guarantees that, in the event of fire, the lender will receive the balance owing on the mortgage loan before you receive any insurance proceeds.

Legal Fees: In order to protect the new owner?s interests every property that has been sold must be recorded in the Land Title Office. It is advised you retain the services of a Notary Public or Lawyer to act on your behalf during the completion process. They will charge a fee for this service, plus disbursements, including the land Title Registration fee. If you are financing your purchase with a new mortgage loan, there will be a further fee and disbursements to prepare and register the mortgage documents.

Here you are all of the costs that are sometimes forgotten and can prove to be a big burden if you have not budgeted for them. Ask your Realtor if you don?t understand, and they will explain or send you to someone who can. Have a great week!