What are the fees involved?
ollowing the purchase of a property, there are several types of fees that can be assumed by the purchaser. Unfortunately, for many buyers, these fees are unknown and are an unexpected expense that was not planned for in their budgets.Here is a list of some of those fees:
1. Title transfer tax
Also known as the ?welcome tax?. This is billed by the city where the property is purchased and is sent to you around 3 to 6 months after the lawyer has completed the transaction. This is an indirect tax that is imposed by the municipality in order to transfer the right of the property to their area.
In order to calculate this tax, we must first base it on the highest price between the purchase price and the municipal evaluation. Then from this amount, you need to separate according to the following categories:
$0 - $50,000 = .5% of the amount in this category
$50,000 - $250,000 = 1% of the amount in this category
$250,000 and more = 1.5% of the amount in this category
Finally, you add the amounts together that correspond to your tax.
For example: A property purchased at $280,000
$0 - $50,000 = 50,000 x 0.5% = $250
$50,000 - $250,000 = $200,000 x 1% = $2,000
$280,000 - $250,000 = $30,000 x 1.5% = $450
Add together: $250 + $2,000 + $450 = $2,700
2. CMHC insurance fees
This is payable at the same time as your mortgage payment and can be paid either at the bank or to the notary/lawyer. It is calculated by:
% of loan: Insurance prime
up to 65% 0.50% of mortgage
up to 75% 0.65% of mortgage
up to 80% 1.00% of mortgage
up to 85% 1.75% of mortgage
up to 90% 2.00% of mortgage
up to 95% 2.75% of mortgage
Example:
You purchase a property worth $200,000. If you give 5% down, or $10,000, your financial institution will insure the difference, or 95% of the loan. The insurance prime will then be $190,000 x 2.75%, $5,225 plus tax. This amount can then be added to your mortgage and the applicable taxes are paid to the lawyer/notary. This will mean that your mortgage will now be $195,225.
If you choose to put 20% down, or $40,000, the insurance prime will only be $1,600, 1% of $160,000. The total mortgage would then be $161,600.
3. CMHC inspection fees
The CMHC charges a fee to evaluate your new property and as a general rule of thumb, most financial institutions will cover this fee (normally $235) as part of a promotion.
4. Professional inspection fees
The price to have a professional conduct an inspection can vary between $500 and $1,500. This will allow them to inspect the property and make sure there are no hidden faults within the property. To help select a good home inspector, nothing is better than a friend?s referral.
5. Notary/Lawyer fees
Fees can vary between $500 and $1,500 and can be even higher in some instances, in depends on your personal situation. It is advised to consult around 2 to 4 companies before deciding on one. Once again, using the referrals of friends can help when selecting a notary/lawyer to work with.
6. Zoning certificate
The certificate will indicate the total area of your land as well as the registry number. If the property does not conform to any new laws, it is the seller that will assume any fees. These can be from around $500 plus tax.
7. Moving fees
These fees can vary depending on what time of year you move, the amount of furniture you have and the total distance involved.
8. Fees for changing utilities
When moving you must pay to disconnect and/or transfer your existing utilities, such as the electricity, cable and telephone. These fees can vary from $100 to $250 for all three.
9. Property insurance
Before going to the notary/lawyer, you should insure your property against fire and other damage. These fees can vary depending on the value of your property, furniture, deductible, etc? Normally they will range between $200 and $1,500. It is once again advised to shop around before selecting a company in order to receive the best price.
10. Adjustments
When you go to the notary/lawyer you should expect some adjustments to the municipal and school taxes, as well as any applicable condo fees. The notary/lawyer will calculate this based on the date of possession and the date of payment for those fees. This will determine how much the buyer will have to reimburse the seller.
11. Heating fees
In regards to the oil reservoir, the seller should fill the reservoir the day of the meeting with the notary/lawyer. They need to bring a copy of the invoice as well as a copy of the last statement. This will assure that the reservoir is full when the buyers take possession. Or, at the time of certain transactions, if both parties agree, the seller can simply give the monetary amount.
In conclusion, it is strongly recommended to consult the following websites before buying a property.
ACAIQ ? www.acaiq.com
CMHC ? www.cmhc-schl.gc.ca
The ACAIQ provides two good guides for the buyer and the seller at a minimal cost of $2.50 plus tax and shipping/handling. Simply call them to order, it?s a good investment that will help you save in the end.
Below you will find a list to help you calculate the approximate costs and expenses involved in buying your new property.
1. Title transfer tax: $
2. CMHC insurance fees: $
3. CMHC inspection fees: $
4. Professional inspection fees: $
5. Notary/Lawyer fees: $
6. Fee for editing of will (notary/lawyer): $
7. Zoning certificate: $
8. Moving fees: $
9. Fees for moving utilities: $
10. Home insurance: $
11. Adjustment of land taxes (municipal): $
12. Adjustment of school taxes: $
13. Adjustment of condo fees: $
14. Adjustment of loan interest: $
15. Adjustment of oil reserve: $
16. CMHC insurance tax: $
17. Renovations and repairs: $
18. Certificate of conformation for wells: $
19. Loan fees: $
20. Other: $
Other fees for a new home
21. GST and PST: $
22. Connecting of public services: $
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