Closing Costs - How much do I need?
Purchasing your first home is not easy. A first time home buyer may really need the hand holding and guidance to be able to confidently move forward -- step by step. What most buyers are unaware of are the fees and costs involved in purchasing a home!
Many clients believe that just because they have $80,000 saved up, it means they can buy a $400,000 property. I mean... 20% of $400,000 is $80,000 so isn't that enough? But, what about legal fees, property transfer tax, appraisals, home inspections, and don't forget... insurance! These all add up!
The more we prep you, the more confident you will feel when purchasing your first home. As well, the less shockers means less stress for you!
TOPIC
Closing Costs
AUTHOR
Jessica Kuan
Closing Cost Items to be Aware of:
Property Transfer Tax
BC property transfer tax is a one time payable tax when you first purchase your home. This is how the property transfer tax (PTT) is calculated:
Exemptions:
If you are purchasing your first principal residence, you may be eligible for a full or partial exemption from property transfer tax. If you are purchasing an EXISTING build, you are eligible for a full exemption if your purchase price does not exceed $500,000. The partial exemption is for existing builds valued up to $525,000. If you are purchasing a NEW build, you are eligible for a full exemption if your purchase price does not exceed $750,000. The partial exemption is for new builds valued up to $800,000.
General Rule of Thumb
The general rule of thumb that we advise clients to have available in their bank account for closing costs is 1.5% of the purchase price. This is what the lenders will typically ask for -- to ensure you have enough funds to complete on your purchase!