Blog entry for Lance Phillips of Macdonald Realty, North Shore and Vancouver Real Estate Specialist, 604-926-6718 or 604-861-6767

In my April 18th blog, I gave some information regarding the Property Purchase Tax and possible exemption scenarios. Though that fee can be waived for first time buyers, the following costs cannot and should not be forgotten when purchasing real estate. Here’s a list of the expenses that will be incurred with any purchase:

- Property Transfer Tax (PTT). Calculated at 1% of the first $200,000 and 2% of the balance of entire purchase price. See my April 18th blog for exemption guidelines.

- The deposit at time of offer. This is a show of good faith to be presented with your offer and is completely refundable should the offer fall through. A general rule of thumb for the deposit is 5% of the purchase price. So if you were purchasing a $300,000.00 piece of property, the deposit would be $15,000.00.

- Downpayment. Depending on whether or not you are obtaining a mortgage and what kind, the general rule of thumb for downpayment is 25% of the purchase price, assuming you can service the debt required on the remaining loan amount. (I will outline mortgage debt service in another blog, as it requires some further explanation.) Your deposit amount is included in this total, so if you had placed a deposit of $15,000.00 on a $300,000.00 purchase, the balance required on the day of completion would be $60,000.00, for a total downpayment of $75,000.00. (The completion date is the day that the property will legally change hands from the current owner to you, usually about 60 days from the date of the offer.)

- Building inspection fee. You don’t want to skimp on this one. Even if you feel you know a lot about houses, get it inspected. It could save you lots of dollars in the future if there are latent defects. Depending on the size of the property, this fee can vary. Count on paying anywhere between $325.00 and $600.00.

- Assuming you are obtaining a mortgage, there will be a mortgage application fee of anywhere between $125.00 and $300.00. These fees are generally payable up front and cannot be tacked onto the mortgage.

- Survey of property. This one applies to free standing structures only, not apartments or townhouses. This is basically a sketch of the boundaries of the site and where the structure sits in conjunction to the boundaries. Often you can get a copy from the current owners, however if not, the fee will be between $300.00 and $400.00.

- Property appraisal. This fee is generally generated through the bank where you obtain your financing. If you are fortunate enough not to require a mortgage, you would be well advised to have an appraisal done in any case. This is an arm’s length market appraisal of the home as compared to others in the area of similar size and quality and will likely confirm the purchase price. The cost for this can be between $250.00 and $500.00 depending on the size of the home.

- CMHC Fees. These are charged when applying for “high ratio” mortgages. These are mortgages where the downpayment amount is less than the standard 25% and the fees are charged on a sliding scale. You can count on paying between 1.25% and 3.75% of the mortgage amount when applying for high ratio mortgages. Your mortgage representative will outline these fees for you at the time of application.

- Notary/Lawyer Fees. These require confirmation from your legal representative, however generally you can count on between $1,000.00 to $2,000.00 for all fees and disbursements.

- GST. This fee is applicable only on new structures. It is also a sliding scale and should be discussed with your realtor. This is a very important one to remember when looking at new construction for purchase.

- There will be an adjustment for the water rates and property taxes. Depending on what time of year you are purchasing the property, it will be calculated accordingly. This is often overlooked, so ensure you ask your lawyer or mortgage representative about it.

- Home and property insurance. Insurance will be required to be in place on the completion date.

- Utility hook ups - phone, electricity, natural gas, cable, etc.

- Moving expenses. Okay, maybe you can get around this one if you’ve helped all your friends move in the past and you’re calling in favours. So consider this category negotiable as well!

For more information regarding this or any other real estate queries, please do not hesitate to e-mail me at lancep@macrealty.com or visit my website at www.lancephillips.com.

Thought for the day - “Never be afraid to try something new. Remember, amateurs built the ark. Professionals built the Titanic.”