What are the Buying Cost to purchase a condo or house in Greater Vancouver?

Cost Estimator for Home Buyer 2020

When you buy a home, the buyer is not only preparing for the purchase price, but also to understand any additional cost of purchase a home before you put up an offer, or before you start thinking your budget.

It is always a good idea for you to know all the possible cost in advance so that you are comfortable for your purchasing and ensure you have enough money to make a living after completion date.

We summarize the list and hope that we can give you a good reference and starting point so that  you can prepare well on our budget for your new home purchase.

If you’re wondering what the cost of buying a house in BC is, here’s our list of the top expenses every buyer should consider.

I will categorize into 3 phases:

  1. Before Subject Removal and On Subject Removal 

  2. Before/On Completion Date

  3. After Completion Date

1. Before Subject Removal

1.1 Property Appraisal

Currently, it is about a few hundreds from $400 to $600 plus GST. When you apply a home mortgage, a lender usually require to do appraisal. Some lenders (or banker) may cover the cost of appraisal or you need to pay in advance for your mortgage application. You may need to confirm your banker or mortgage broker. It is up to the lender if they really have to do the appraisal for mortgage application.

1.2 Home Inspection

The cost for home inspection is ranging from $300 to $800 + GST depends on the size of the home. Condo is usually around $300 – $500 while House usually cost $500 – $800. The expense are borne by the buyer. In some case, the seller may have a pre-inspection done. Or you may choose to waive the inspection clause.

1.3 OIL Tank Inspection

Many homes in the Greater Vancouver area built before 1957 were originally heated with furnace oil. When natural gas became available, the oil storage tanks, which were normally located underground in backyards, were filled with sand or capped.

If you house is a bit older before 60’s year or older, you may find old tank company to have a professional oil tank scan. It is about $100 – $150 for a scan.

If an oil tank is discovered on a property it has to be removed immediately at the owner’s expense. If there is no leaking, there will be around a few thousands.

If it has been leaking oil, it could cost a lot of money from tens or even hundreds of thousands of dollars in remediation costs. If you’re looking to buy a house, it is always recommended to get an Oil Tank Scan by a qualified professional!

In some cases, the sell has done the property scan and it can provide you the oil tank scan certification to indicate that there is no oil tank found from their scan report.

On Subject Removal Day or within 1-2 business days depends on the Deposit terms.

1.4 Deposit

There is no fix requirement for how much a buyer should pay for deposit. However, in Greater Vancouver, about 5% of the purchase price for deposit is common. And the deposit is usually paid paid either upon or within 24 hours of your offer being accepted depending on how the contract is structured. The deposit is usually paid to the buyer agent brokerage company’s trust account, and will be held until completion date. This deposit will form a part of your down payment on completion date.

2. Before and On Completion Date

2.1 CMHC Insurance Premium (Depends..)

If your deposit is below 20% and you need a home mortgage, the type of mortgage is considered as high-ratio mortgage. CMHC will require you to have 20% down payment.
The amount CMHC charge you is based on a sliding scale. the charge will be different when you have 5% down or 18 % down payment. While you can pay this lump sum at completion, it is also common to blend this CMHC Insurance Premium in your monthly mortgage payment. And it is one time payment at the beginning of mortgage. You may consult your banker or mortgage broker for more information.

2.2 Legal Fees

It is Typically $900-$1400 + GST for title conveyance fee and document fee, but the amount varies depending on purchase price and, lawyer or notary public. This is the fee that the lawyer charges for their services transfer title of the property from the seller to the buyer on completion date. This should also include title search and registering title in general.

2.3 Title Insurance

Title insurance protects you and the lender when there is any chance from title fraud, municipal work orders, zoning violations, and other property defects relating to Title While the lender may require you to buy it at your expense for your mortgage condition, sometimes, you will have an option whether you need to purchase title insurance or not. You may consult your lawyer in details how this may protect you.

2.4 Property Survey (House)

If the homeowner does not have a property survey, the lender or banker may require that you order a survey certificate of the property. The cost can range from $500 or more. This is not required on strata properties (eg. Condo or townhouse), and typically only applies to detached house lots.
Insurance

You will be a new homeowner, you’re going to need insurance. Most lenders require homebuyers to purchase home, fire and liability insurance. If you’re purchasing a strata property such as condo or townhouse, the strata corporation will also require owners to have insurance for their own property in addition to the strata’s coverage for the building as a whole.

Nowadays, a buyer must be very careful when they buyer a condo. Must need to check the deductible of the building. For the last half year, many building has increase a lot for their strata insurance cost and deductible for water damage. When the deductible is high, it mean that the owner will pay more in their own insurance to cover bigger deductible. If the insurance requires that the deductible is over $100,000, most of the BC insurance company may not cover. Then, the buyer may need to seek other resource such as online insurance to cover the insurance with bigger deductible.
Insurance should be effective on the completion date of the sale.

2.5 Life Insurance

Another insurance option that may be considered is mortgage life insurance. While it’s not a requirement, it does help protect a family or estate by paying off the balance of the mortgage should the owner die or become disabled.

2.6 Form B and/or Strata Documents (if strata)

The lawyer or Notary public may order the latest Form B or Strata Document to ensure that the lawyer get the latest strata updated document. It is up to the lawyer or Notary Public to decide.

2.7 Strata Move in Fee (if strata & if applicable)

The fee is one time fee for the owner or the investor to move in. The fee is usually stated in the strata bylaws. It is better to prepare the move in fee in your budget, estimating about $100 – $300.

2.8 The Balance of the Purchase Price

Don’t forget to prepare the balance of the price price consists of your additional down payment and mortgage from your lender or banker.

2.9 Property Transfer Tax (PTT)

Please note that this should be one of the biggest costs on the completion date. You may check if you are qualify for an exemption based on the latest tax exemption rule. In general, most buyer will need pay the property transfer tax on your purchase. The property transfer tax is based on the fair market value (eg. the purchase price in general). For most residential properties, the property transfer tax rate is calculated as:

  • 1% on the first $200,000
  • 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000
  • 3% on the portion of the fair market value greater than $2,000,000, and,
  • if the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000

The most notable exemptions for property transfer tax are the first time home-buyer PTT exemption and Newly Built Home PTT exemption. For more information on property transfer tax and PTT exemptions, you may find more information here: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions

2.10 Property Tax and Utility Adjustment

In General, property taxes are paid on July 1st every year. If your adjustment date in the contract agreement is post July 1, you will likely have to provide a reimbursement to Seller of property taxes they paid beyond the adjustment date. On the other hand, this can also be a credited amount back to the buyer depending on the adjustment date and whether or not the seller paid the taxes prior to the completion date. The calculation is based on the number of days belongs to the Sellers while the number of days belongs to buyers. The buyers and sellers will be paid on the prorated portion.
Some owner may pay the utility (eg. Water and Sewer fee) in advance as some cities may request to owner to pay the utility fee earlier. Similarly, the buyer will pay the prorated portion of the utility paid.

2.11 Adjustments for Condo Fees

It will be based on the adjustment date in the contract. For example, if your adjustment date (eg same as possession date in general) is on 15th of a month in April, then you will credit back 15 days of the strata fee back to the Seller who has paid the fee at the beginning of month.
Reimbursement to Seller for prepaid utilities, water fees, strata maintenance fee, etc. (amount varies)
Adjustments for Rentals and Security Deposits
If the home has a rental portion, or you are taking over the lease or keep the current tenants after the completion date, the security deposit should be transferred to the new buyer from the seller. Additionally, if the possession date is not at the 1 st day of month, the seller should credit the buyer for a prorated portion of that month’s rent.

2.12 Additional PTT – Foreign Buyer Tax (if applicable)

An additional 20% of the fair market value (or purchase price) is charged if you are non Canadian on the completion date (or the title is transferred to a foreign entity). This applies to foreign buyer who purchase the property in the following areas: Metro Vancouver, Capital Regional, Fraser Valley, Nanaimo & the Okanagan. The additional property transfer tax doesn’t apply to properties located on Tsawwassen First Nation lands or some exempted area. Please consult your accountant and lawyer for the latest update about the Foreign buyer tax.

2.13 GST

For newly built house, townhouse, condo or real estate presale, the buyer will need to pay 5% tax based on the purchase price; If you want to include GST to be added to your mortgage, you may consult you banker for feasibility.
For more information on GST and rebate,
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4028/gst-hst-new-housing-rebate.html

3. After Completion Date

3.1 What You Need to Pay For After Closing

  • Moving Expenses
  • Change locks fee (varies depending on how many)
  • Electric/Gas/TV Cable Connection Charges(varies)
  • Damage deposit for move-in (refundable)

Please check for any tax exemptions as a buyer and if they apply to you!

Four common tax exemptions that may probably bring down the cost of buying a home if you may qualify:

First Time Home Buyers’ Program

If you’re purchasing your first home, you may qualify to reduce or eliminate the amount of property transfer tax you pay.

Newly Built Home Exemption

If you’re purchasing a newly built home, you may qualify for a property transfer tax exemption.

Family Exemptions

GST and Rebate

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4028/gst-hst-new-housing-rebate.html

Buyer’s Agent Commission

In Canada, you do not need to pay us the commission, and the seller will pay both side commission. But, a Realtor can represent you on your behalf and protect your best interest. You get the realtor’s experience, market knowledge, negotiation skills to guide you through the buying process.

Purchasing is probably one of the largest investments, decision you have ever made in your life, it is important to have an expert on your side to protect your best interest and negotiate the best deal for you. Please remember to use a Realtor to represent you on your real estate transaction.

If you have any real estate question for buying, selling or property management, feel free to contact me at (778) 862-8321.