closing costs
Knowing your closing costs as a home buyer is important. Qualifying for the mortgage and having a down payment is essential to securing the mortgage. In addition, lenders want to ensure you have sufficient funds to cover the closing costs before your are fully approved.
The closing costs are made up of two main components. These are payable to the lawyer by the buyer and are NOT part of the down payment or the mortgage.
First, the legal fee. That can vary depending on if you are selling a home and buying a new one or just buying a home. The fees can also vary by law office or notary by city or region. Always get a quote so you are clear on what is and isn’t included in the fee so you are not surprised at the end. It can add up to a couple of thousand dollars easily.
Second, the property purchase transfer tax. As a first-time home buyer you are exempt from this tax with a property purchase up to $500,000. New rules implemented in 2024 expanded on that exemption for first-time buyers. The exemption is still to $500,000. However, up to $835,000 you only have to pay 2% on the amount above the $500,000 to the max of $835,000. In this scenario the property purchase transfer tax will be $6700. For new build homes the exemption limit is $1,100,000 instead of the $835,000.
https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/first-time-home-buyers
For anyone that is not a first-time home buyer you will have to pay the full property purchase transfer tax to the lawyer for completion. That amount is calculated at 1% of the first $200,000 and 2% thereafter of the purchase price. In the above example of a $835K home your property purchase transfer tax will be $21,700
Knowing your closing costs is essential. Our Mortgage Toolbox app can also help you be clear on these costs with the touch of a few buttons. Download now Download My Mortgage Toolbox – Pauline Tonkin (dlcapp.ca)