BUYING YOUR HOME
Congratulations on making the decision to own your new home. To help make the process as easy and understandable as possible I will answer questions about the process for dealing with a lawyer or notary public and claiming a GST rebate when purchasing a brand new home. If you are a non-resident home buyer, I can help. If you are a first time home buyer you may also have questions about qualifying for an exemption of the provincial Property Transfer Tax and/or using your RRSPs under the federal Home Buyer’s Plan (HBP).
As the purchaser, you will have incorporated into your costs the amount of your down payment, your moving expenses, and the possibility of any upgrades you wish to make to your new home. However, when buying your home, there are one-time closing costs and there may be other expenses to consider:
Lawyer or Notary Public Fees
Whether you retain a lawyer or a notary public, these professional fees may range from between $750 to $1000. The lawyer or notary public assists with obtaining and/or preparing the supporting documents for the sale/purchase. Their services may include: title search and title registration at the Land Title Office, tax information specific to the property, transfer of mortgage documents, disbursement of funds, and providing you with a final Certificate of Title (if applicable). When choosing your lawyer or notary public please be aware of the services included in the quote, and which fees may be billed separately.
Other Disbursements
Some closing requirements are attended to by the lawyer or notary public, however are billed outside the quote for their professional fees. These may range from obtaining a municipal tax certificate to obtaining the Form F from the Strata Corporation (if you are purchasing into as Strata Lot). The lender may also require a Certificate of Location (Property Survey)
The certificate should currently state any improvements to the property; it is required by both the notary/lawyer for transfer of ownership as well as the lender to approve the mortgage.
Closing Adjustments
Some adjustments to fees and taxes will be calculated and prorated dependent on the closing date of your new home as well as the location (municipality) of the property purchased. Adjustments may occur to the following expenses: municipal taxes and water and sewer fees, strata maintenance fees, and rent and security deposits. Many of these adjustments will be documented by your lawyer or notary and itemized on the Statement of Adjustment. Any balances to be paid at time of completion will be made payable in trust to your lawyer or notary public.
Insurances
Default (or High Ratio) Mortgage Insurance Premium and PST (where applicable): If your down payment is less than 20% of the purchase price, the lender will require you to have this insurance. The premium for the insurance can be added to your mortgage; however, the PST calculated on the premium will be added to closing costs.
Fire Insurance: When the mortgage closes you must have fire insurance effective from the time you take possession. Speak to an insurance agent to confirm that the property is insurable. Also, some insurance companies may require proof of a home inspection.
Title Insurance: Your lawyer or notary may suggest an insurance policy to protect you, the home owner, against challenges to the ownership of your home or from problems related to the title to your home.
Obtaining Financing
Appraisal (if applicable): As you are obtaining financing, the property may be appraised dependent upon the type of property being purchased. An independent appraiser may be hired to evaluate the property and confirm it meets lending criteria.
Bridge Financing (if applicable): If the sale of your current home does not close before the purchase of your new home, bridge financing can be put in place for a short period of time to finance your new home. The cost of your new home purchase is then financed for a short period of time.
Non-Resident Home Buyer
As a non-resident of British Columbia you are welcome to purchase property (as many properties as you require), however, there may be certain considerations when applying for a mortgage, executing closing documents, as well as tax obligations when renting or selling the property.
Property Transfer Tax
In the province of British Columbia, when you purchase or gain interest in property that is registered at the Land Title Office (residential, commercial, or industrial) you are responsible to pay a property transfer tax.
The amount of tax you pay is based on the fair market value of the land and improvements (e.g. buildings) on the date of registration unless you purchase a pre-sold strata unit. The tax is charged at a rate of 1% for the first $200,000 and 2% for the portion of the fair market value that is greater than $200,000.
As the purchaser, you will have incorporated into your costs the amount of your down payment, your moving expenses, and the possibility of any upgrades you wish to make to your new home. However, when buying your home, there are one-time closing costs and there may be other expenses to consider:
Lawyer or Notary Public Fees
Whether you retain a lawyer or a notary public, these professional fees may range from between $750 to $1000. The lawyer or notary public assists with obtaining and/or preparing the supporting documents for the sale/purchase. Their services may include: title search and title registration at the Land Title Office, tax information specific to the property, transfer of mortgage documents, disbursement of funds, and providing you with a final Certificate of Title (if applicable). When choosing your lawyer or notary public please be aware of the services included in the quote, and which fees may be billed separately.
Other Disbursements
Some closing requirements are attended to by the lawyer or notary public, however are billed outside the quote for their professional fees. These may range from obtaining a municipal tax certificate to obtaining the Form F from the Strata Corporation (if you are purchasing into as Strata Lot). The lender may also require a Certificate of Location (Property Survey)
The certificate should currently state any improvements to the property; it is required by both the notary/lawyer for transfer of ownership as well as the lender to approve the mortgage.
Closing Adjustments
Some adjustments to fees and taxes will be calculated and prorated dependent on the closing date of your new home as well as the location (municipality) of the property purchased. Adjustments may occur to the following expenses: municipal taxes and water and sewer fees, strata maintenance fees, and rent and security deposits. Many of these adjustments will be documented by your lawyer or notary and itemized on the Statement of Adjustment. Any balances to be paid at time of completion will be made payable in trust to your lawyer or notary public.
Insurances
Default (or High Ratio) Mortgage Insurance Premium and PST (where applicable): If your down payment is less than 20% of the purchase price, the lender will require you to have this insurance. The premium for the insurance can be added to your mortgage; however, the PST calculated on the premium will be added to closing costs.
Fire Insurance: When the mortgage closes you must have fire insurance effective from the time you take possession. Speak to an insurance agent to confirm that the property is insurable. Also, some insurance companies may require proof of a home inspection.
Title Insurance: Your lawyer or notary may suggest an insurance policy to protect you, the home owner, against challenges to the ownership of your home or from problems related to the title to your home.
Obtaining Financing
Appraisal (if applicable): As you are obtaining financing, the property may be appraised dependent upon the type of property being purchased. An independent appraiser may be hired to evaluate the property and confirm it meets lending criteria.
Bridge Financing (if applicable): If the sale of your current home does not close before the purchase of your new home, bridge financing can be put in place for a short period of time to finance your new home. The cost of your new home purchase is then financed for a short period of time.
Non-Resident Home Buyer
As a non-resident of British Columbia you are welcome to purchase property (as many properties as you require), however, there may be certain considerations when applying for a mortgage, executing closing documents, as well as tax obligations when renting or selling the property.
Property Transfer Tax
In the province of British Columbia, when you purchase or gain interest in property that is registered at the Land Title Office (residential, commercial, or industrial) you are responsible to pay a property transfer tax.
The amount of tax you pay is based on the fair market value of the land and improvements (e.g. buildings) on the date of registration unless you purchase a pre-sold strata unit. The tax is charged at a rate of 1% for the first $200,000 and 2% for the portion of the fair market value that is greater than $200,000.
Property Transfer Tax Full or Partial Exemptions
You may be entitled to a property transfer tax full or partial exemption for family or other reasons. Frequently, first time home buyers are entitled to an exemption or reduction based on their personal circumstances.
Family or Other Full or Partial Exemption: To confirm if you qualify for a family or other full or partial exemption
You may be entitled to a property transfer tax full or partial exemption for family or other reasons. Frequently, first time home buyers are entitled to an exemption or reduction based on their personal circumstances.
Family or Other Full or Partial Exemption: To confirm if you qualify for a family or other full or partial exemption
First Time Home Buyer: To confirm if you qualify for a first time home buyer full or partial exemption
Non-Resident Home Buyer
As a non-resident of British Columbia you are welcome to purchase property (as many properties as you require), however, there may be certain considerations when applying for a mortgage, executing closing documents, as well as tax obligations when renting or selling the property.
First Time Home Buyer – Home Buyer’s Plan (HBP)
Home Buyer’s Plan (HBP)
According to the guidelines of Canada Revenue Agency, ‘The Home Buyers’ Plan (HBP) is a program that allows you to withdraw funds from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related[ person with a disability. You can withdraw up to $25,000 in a calendar year.
Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP, or they may not be deductible for any year.
As a non-resident of British Columbia you are welcome to purchase property (as many properties as you require), however, there may be certain considerations when applying for a mortgage, executing closing documents, as well as tax obligations when renting or selling the property.
First Time Home Buyer – Home Buyer’s Plan (HBP)
Home Buyer’s Plan (HBP)
According to the guidelines of Canada Revenue Agency, ‘The Home Buyers’ Plan (HBP) is a program that allows you to withdraw funds from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related[ person with a disability. You can withdraw up to $25,000 in a calendar year.
Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw them under the HBP, or they may not be deductible for any year.
Rachel Cousins
Mortgage Broker Nanaimo, Parksville, Nanoose, Qualicum Beach, and Port Alberni Vancouver Island, BC Cell: 250.618.5053 Fax: 1.877.282.0857 E-mail: rachel@rachelcousins.com Office: 135 Alberni Hwy Parksville, BC V9P 2G6 |
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Rachel Cousins - Mortgage Broker working with Mortgage Architects in Nanaimo, Parksville, Nanoose, Qualicum Beach, Port Alberni and central Vancouver Island. Check out the current mortgage rates
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