Common Costs and helpful tips for First-Time Homebuyers
MORTGAGE DEFAULT INSURANCE
If your down payment is less than 20% of your purchase price, your mortgage must be insured by either the Canadian Mortgage Housing Corporation (CMHC) or Genworth Financial Canada. The premium charged by the insurer will be added to your mortgage balance.
All mortgages require fire insurance in the name of the lender.
PROPERTY PURCHASE TAX
In BC, a provincial tax is charged at a rate of 1% for the first $200,000 of your purchase price and 2% from $200,000 to $2,000,000 on the balance. First-time home buyers may qualify for an exemption. Your lawyer, or notary public, can help you determine your eligibility.
A typical conveyance (paperwork for your purchase) will cost between $700 to $1,000 and is done by a lawyer or notary public. The cost covers both the legal fees and any and all disbursements, such as property taxes, registration at land titles, title insurance, and so forth.
SURVEYS AND TITLE INSURANCE
Lenders usually require a site survey or title insurance. A site survey verifies the boundaries and dimensions of both the building and the lot you are purchasing. This costs generally around $300. An alternative to a site survey may be title insurance which costs approximately $200. Consult your lawyer or notary to see which option is best for you.
Lenders may request an appraisal of your property. Formal on-site appraisals are generally not required if your mortgage is high ratio and is insured by the CMHC or Genworth Financial Canada.
A building inspection is not required for financing, but it is a good investment. Starting at around $300, with price dependent upon the size and the type of home, a building inspector will tell you the overall condition of the property, and alert you to any potential problems.