It is important when you decide to buy a home in the Victoria and surrounding area real estate market you have a full understanding of the costs associated with it. Often people assume the only cost of buying a home in our real estate market is the price of the home and that is it. There are a lot of additional costs that you must be prepared for when buying a home and it is important that you are fully aware of them. You will need to have some additional money set aside to cover these costs.
Your largest initial expense will be your deposit which acts towards your down payment. This generally depends on the purchase price of the home but I will guide you on that. The seller needs to feel that you won’t walk away from the deal without your deposit if you need to.
Another large expense when buying a home in British Columbia is the property transfer tax. It is important to consult with your mortgage broker about this. You can find more about the property transfer tax in British Columbia here.
As a quick reference the property transfer tax rate is:
- 1% on the first $200,000
- 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000
- 3% on the portion of the fair market value greater than $2,000,000, and
- If the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000 (effective February 21, 2018)
- If the property is classified as residential and farm, or is residential mixed class (such as residential and commercial), you pay the further 2% tax on only the residential portion of the property
You should also be prepared to pay:
- Legal fees and disbursements
- When buying a new home (newly built never lived in) you are sometimes responsible for GST and/or PST if applicable
- Adjustments (payable to the vendor such as taxes if the seller paid them for the entire year)
- Interest for the time it takes land titles to transfer and the seller to get paid
- Utility Payments
- If in a Condominium type of ownership, condo or strata fees
- Home inspection fees or any other ancillary service fees requested by you as the buyer (furnace inspection, appraisal fee, water quality/quantity tests for acreages)
- Mortgage broker’s fees (if applicable)
- Mortgage loan insurance premium (if less than 25% down) plus application fee
- Moving expenses
- Renovations, repairs, paint, carpeting, window coverings
- Property/Condominium Insurance
Additionally, once you have purchased your home you will incur regular expenses on a monthly, quarterly or yearly basis such as:
- Mortgage payments (you can do these weekly, bi-weekly, or monthly)
- Water/sewer payments
- Electricity and gas services
- Cable/telephone/internet services
- Property taxes
- Strata or Condo fees
- Repair/Maintenance expenses
- Homeowners insurance
Don’t let this list of additional expenses worry you about buying a new home. All of these costs are part of purchasing a home and are well worth it. There are different expenses depending on the type of home you purchase and I will do my best to help you understand these. Be sure to contact me if you are looking to buy in the Vancouver Island real estate market.