The amount of mortgage you qualify for will indicate your price range.  In addition, you want to calculate all of the associated costs of the transaction to ensure you have all the finances required to complete a purchase. 

Many consumers do not realize that there are other costs associated with purchasing property.  As a rule of thumb, I suggest that my clients budget approximately 2-3% of the purchase price.  This amount should be factored into your budget when arranging for financing.

Individual Costs And Their Meaning?

Goods and Services Tax (“GST”): If you are purchasing a new property or in a new development your purchase will be subject to GST.  For home buyers, people that intend to live-in the property, the Government offers a GST rebate. 

  GST/HST Rate Reduction and Purchasers of New Housing

Property Transfer Tax:  You may be required to pay a tax when purchasing property.

Property Taxation Branch of British Columbia

Deposit:  The deposit is generally between 5% - 10% of the purchase price and is held in trust with the Brokerage firm until the Completion Date. 

Property Inspection Fee:  A property inspection is a report on the condition of the property and the cost of this inspection will vary.  Although this is optional, it is highly recommend that you have a trained professional inspect the property you intend to purchase.    

Appraisal Fee:  Most mortgage lenders will require an appraisal if you make a down payment of 25% or more of the purchase price.  Although it is less common for high-ratio mortgages, you should confirm this with the lender you intend to work with.  More often then not, the lender will charge you a fee for the appraisal.    

Mortgage Loan Insurance Application Fee and Premium:  If you intended to finance more then 75% of the purchase price of the property (less then 25% down payment also known as a high-ratio mortgage), you will be required to have mortgage loan insurance.  This is commonly referred to as the CMHC fee. 

Canadian Mortgage and Housing Corporation (“CMHC”)

Legal Fees and Disbursements:  These must be paid upon closing and will cost between $650-$1000.00 (plus GST).  Your lawyer/notary will also bill you any direct costs to check on the legal status of your property. 

Adjustment Fees:  The Adjustment Date will be the same as the Possession Date.  As of the Adjustment Date you will be responsible for all taxes, utility charges, maintenance fees (in the case of a strata property) and other such applicable charges.  As an example, if the possession date of the transaction is August 1, the previous owner is responsible for property taxes up to the day before the possession date and you are responsible for the taxes from the possession date onwards.  In this case the previous owner should have already paid the taxes, as they are due on July 1.  This means that you will have to reimburse the Seller for the property taxes from August 1 through till December 31.    

Property Insurance:  The mortgage lender may require that property insurance be in place prior to funding the mortgage.  This insurance covers the cost of replacing the structure and its contents.  Property insurance must be in place by the Closing Day.  However, I always recommend that my clients start the insurance the day before the actual Closing Date.      

Down Payment:  Typically this can range between 5% - 25% of the purchase price but can also be more depending on your situation.   

Title Insurance:  Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property.