Following is a list of additional costs that you may encounter when buying a home. Some are one-time costs and others will be regular monthly expenses.
Goods & Services Tax
The 5% GST applies to all new housing, substantially renovated housing and all undeveloped lots and acreages. Purchasers of newly constructed or substantially renovated residential homes are entitled to a rebate equal to 36 per cent of the GST paid on the home. The full rebate applies to newly constructed or substantially renovated homes which cost the purchaser $350,000 or less before the GST. The rebate is reduced if the purchaser’s cost is between $350,000 and $450,000. Resale housing is exempt of GST unless the home has been substantially renovated, and then the tax is applied as if it were a new home. When you purchase an acreage with an existing residence GST may be applicable on the land in excess of 1.2 acres.
Your lender may require a property appraisal at your expense. The typical basic appraisal for mortgage purposes may start at $350, plus GST, and increase from there.
Taxes are always a certainty. If you have a high-ratio mortgage, your lender may require that you have your property tax instalments added to your mortgage payments.
Real Property Report (survey)
Your lender will require an up-to-date Real Property Report or Title Insurance in lieu of a Real Property Report. If the offer to purchase does not require the seller to provide these documents you will have to pay for them yourself. A Real Property Report that is 10 years old or older may not be acceptable to the lender.
This insurance covers the replacement value of the structure of your home and its contents. Your lender will insist on this because your home is the security for your mortgage.
Prepaid Taxes or Rent
Property taxes and rent are prorated as of closing day and the purchase price adjusted accordingly. You will have to reimburse the seller on a prorated basis if some bills have been prepaid beyond the closing date.
You may be charged a fee to connect the new services and utilities (telephone, cable TV, satellite TV, high speed internet, natural gas and electric power) at your new home.
Land Transfer Tax
It varies from province to province and is a percentage of the property's purchase price. It is usually about l% to 4%of the purchase price. As yet, there is no land transfer tax in Alberta. However, there is a title registration fee of $1 per $1,000 of the purchase price plus a surcharge.
Mortgage Registration Fee
All mortgages must be registered on title. This registration fee is $1 per $1,000 of the value of the mortgage plus a surcharge.
Lawyers' fees plus disbursements and GST. Even a straightforward home purchase requires a lawyer to review the offer to purchase, search the title, draw up mortgage documents and tend to the closing details. Lawyers' fees vary widely depending on the complexity of the transaction.
Mortgage Loan Insurance Premium and Application Fee
If you have a high-ratio mortgage, your lender will require mortgage loan insurance provided by CMHC or a private company. This insurance will cost 0.5% to 4.0% of the amount of the total mortgage depending on the cash to value ratio plus an application fee. These fees may be added to the mortgage or paid in full at closing.
Mortgage Broker's Fee
A broker may charge a fee to find you a lender, usually around 2% of the total mortgage. However, in many cases, the lenders pay mortgage brokers a commission and the mortgage broker does not charge a fee.
The cost of a professional moving company or a rental truck if you move yourself. Fees for a professional mover can range from $75 to $150 an hour for a van and three workers. These costs may be 10% to 20% higher at the end of the month and in the summer.
The Estoppel Certificate certifies when the monthly condominium fees and other payments owed to the condominium corporation are paid and the existence of any arrears. The Estoppel Certificate and supporting documents may cost up to $100. You may want to have these documents reviewed by a Condo Document Review Company. There will be a cost for this review.
Condominiums charge monthly fees for common area maintenance, such as grounds keeping and carpet cleaning. Fees range widely depending on the type of structure.
Home Inspection Fee
Inspectors are unregulated in Alberta, so fees range widely, from about $350 to $500, plus GST, for a home priced under $500,000. Larger, more expensive homes cost more to inspect. A two-hour inspection carried out by an engineer who provides a written report will cost closer to the upper limit.
Renovation and Repairs
A home inspection may indicate that the home needs major structural repairs such as new shingles. Don't forget to factor these costs into the price of the home.
Water Quality and Quantity Inspection
All homes that are serviced by well must have a water bacteria test to certify that the water is safe to drink. There is a $55 fee of for a water bacteria test. You may also want flow test done to prove that the well will produce sufficient water to meet the daily needs of an average family. Typically the cost of a flow test is $300 to $350.
This list is based on our 18 years experience in the real estate industry. Please bear in mind that NOT all of these costs will apply in every situation. We would be pleased to work with you and help you over these hurdles.