Hidden Costs Simplified
“Hidden costs” is a term referring to the closing costs which is comprised of individually itemized costs that have not been considered by the buyer when purchasing a home. They are required to be paid on or before the closing date. Buyers should consult with their real estate agent to come up with a budget to set aside some cash to cover for these hidden costs.
Closing costs varies because each item may or may not apply to you as a buyer. Your lender and the size of your loan among other factors also affect how much the costs are so you would not have the exact number until your lawyer or notary have made all the calculations. In general, they are approximately 2% to 4% of the final home sale price, which can run into thousands of dollars on top of the down payment and mortgage payments.
Most Common Hidden Costs
- Mortgage Application Fee
- Property Transfer Tax (PTT)
- Home Inspection Fees
- Goods and Services Tax (GST)
- Legal Fees
Property Transfer Tax Simplified
Property Transfer Tax is usually the largest piece of the puzzle, so let us simplify it for you.
The British Columbia Provincial Government imposes a Property Transfer Tax, which must be paid before any home can be legally transferred to a new owner. Very generally, we say Property Transfer Tax is about 1.5% to 2.5% of purchase price. However, it is actually a sliding scale that works like this:
You pay a 1% tax on the first $200,000 of the property value pus and extra 2% on the balance up to $2 million. The amount between $2 million and $3 million is an extra 3%. In addition, there is another 2% on the portion over $3 million.
Even if you are just starting to think about buying a home, it would be a good idea to start having a conversation with me. It does not matter if you are buying today or two years down the road. I am focused on providing the best service for you and that start with an assessment of how much you can afford. I will guide you through the equity building journey. I can help you with money saving strategies in buying a home and you will be on the road to owning your dream home today or in the future.