9 Closing Costs When Buying a Home in BC
Buying a home is an exciting adventure, but when it comes time to close the deal, there are a few costs you’ll need to keep in mind. These closing costs can sneak up on you if you’re not prepared, so let’s break them down and make sure you're ready for everything. Here’s a friendly guide to the 9 most common closing costs in British Columbia.
1. Deposit – Your First Commitment
Once your offer is accepted and you've removed the subjects (like financing and inspection), you’ll need to put down a deposit within 24 hours. The deposit is usually around 5% of the purchase price, and it’s held in trust by your realtor. This money goes towards your down payment, so think of it as your way of saying, "I’m serious about this place!" You’ll pay by bank draft and it’s all part of the deal.
2. Home Inspection – Get a Clean Bill of Health for Your New Home
Before committing to your new home, it’s a smart idea to get a home inspection to make sure there are no hidden surprises. These inspections can range between $500 and $900, depending on the size and complexity of the property. It’s a small investment that could save you a big headache down the road!
3. Appraisal – Proving Your Home’s Worth
Your lender may require an appraisal to confirm the market value of the home. This is especially true if your mortgage is higher than the purchase price. The cost of an appraisal typically runs between $350 and $500, plus GST. It’s not a fun expense, but it helps ensure you're paying a fair price.
4. Solicitor Fees – A Legal Professional to Handle the Paperwork
You’ll need a lawyer or notary to handle all the legal nitty-gritty when transferring ownership of the property. The solicitor will take care of things like title searches, drafting documents, and registering the land title. Legal fees vary, but it’s important to budget for this part of the process, as it ensures everything is in order.
5. Property Transfer Tax (PTT) – The Government’s Cut
In BC, Property Transfer Tax (PTT) is due when you buy a home, and the rate depends on the purchase price:
1% on the first $200,000
2% on the amount from $200,000 to $2 million
3% on anything over $2 million
First-time home buyers may be able to avoid PTT if the home costs less than $835,000. And if you’re buying a new home, you might be exempt if the price is below $1.1 million. Always double-check, as this can save you a nice chunk of change!
6. Moving Expenses – Time to Pack Up!
Moving can be a hassle, but it’s one of those unavoidable costs. If you’re buying a strata unit, there’s often a move-in fee (usually for building services). Additionally, you’ll need to cover connection fees for utilities like hydro, gas, and internet. It might not feel like a huge expense, but those little fees add up fast.
7. Home Insurance – Protect Your Investment
Most lenders in BC require that you have home insurance for detached homes. While strata units usually come with insurance for shared spaces, it’s still a good idea to get additional contents and liability insurance. This will protect you from unforeseen accidents or damages that can happen inside your unit.
8. Strata Fees – Paying Your Share
If you’re buying a condo or townhouse in a strata building, keep in mind that you may need to pay the seller back for any prepaid strata fees. These fees typically cover maintenance, building insurance, and common area upkeep. Your realtor and solicitor will help sort this out, but be sure to check the strata’s financials so you know what you're getting into.
9. Property Taxes and Utility Bills – Don’t Forget the Basics
Finally, you’ll need to reimburse the seller for any prepaid property taxes and utilities at the time of closing. This is one of those small costs that can sneak up on you, but your lawyer or notary will help calculate the exact amount you owe. And be prepared for property taxes to be added to your monthly mortgage payments by your lender if that’s the arrangement.
Bonus Tip: Be Prepared, Budget, and Ask Questions
Now that you know the main closing costs, make sure to budget for them when you’re planning your home purchase. It’s always better to be over-prepared than caught off guard. And if you’re unsure about anything, don’t hesitate to reach out to your realtor, lawyer, or myself— we’re there to help you through every step of the process.
Buying a home is a big deal, but knowing what to expect with these closing costs will help make your journey smoother. Good luck, and happy house hunting!