Closing Costs and Completing the Purchase
You have found the perfect home for your family. The seller has agreed to your offer, conditions have been removed, and the financing is in place. Concluding the purchase of your home does not have to be stressful as you and the seller work out the remaining details of the deal — sometimes at the last minute.
You should report any minor issue to your agent and attorney to prevent small issues from turning into major problems that could derail the closing. An experienced real estate agent and attorney can make the difference between a tense or relaxed path to the closing table.
Vancouver Real Estate Closing Costs
Vancouver real estate buyers must pay a series of one-time fees to close the transaction. The closing costs you must pay depend on the situation. Typical costs include a real estate appraisal, title search, and legal fees. Some other costs incurred by Vancouver real estate buyers include:
Goods and Services Tax (GST): Equals 5 per cent of the purchase price for a new single-family home, townhouse, or condominium. It also applies to substantially renovated properties. There is a GST rebate offered for properties and buyers that meet certain criteria. You must pay the GST to receive a rebate.
Property Transfer Tax: Vancouver real estate buyers must pay a property transfer tax, which is calculated based on the following formula: 1% on the first $200,000, 2% up to $2,000,000 and 3% on the remaining purchase amount. First-time buyers may qualify for a waiver on homes purchased for $475,000 or less.
Prepaid Property Tax and Utilities: Buyers must reimburse the seller for the portion of prepaid property taxes and utilities from the date of possession to the year-end.
Mortgage Loan Insurance: Mortgage loan insurance from the Canadian Mortgage and Housing Corporation is a requirement for property purchased with less than 20 per cent down payment.
Interest Adjustments: If you receive the mortgage funds outside the standard period, you will have to pay the interest that accrued. For example, if you close the 15th day of a 30-day month, you will need to pay the lender the interest amount due for the remaining 15 days of the month.
Fire and Liability Insurance: Mortgage lenders require buyers to present proof of this coverage for financial protection against loss by fire and enable the buyer to cover potential losses. The amount of the insurance must cover the full value of the property.
Your attorney should provide an estimate of the closing costs a few days before closing. You will need to pay this amount along with any balance remaining for the down payment at the closing. You will have to make a payment before signing the legal documents required to transfer ownership and receive the keys to your new home.
Final Steps to Closing
The buyer’s attorney needs to gather information regarding how you will hold title to the property, such as “joint tenants” for a husband and wife. The attorney must also conduct a title search of the property records and obtain the property tax information and other information to prepare the Statement of Adjustments.
Many of the duties of your attorney take place during the closing process. Activities include:
- Performing a title search to see if the property has claims or obligations against it
- Clearing up any claims before closing the transaction
- Overseeing and verifying the proper preparation and accuracy of closing documents, including title transfer, mortgage paperwork, and property transfer tax forms, and Statement of Adjustments
Once your attorney receives all the documentation for the real estate agents and the lender, he or she will start the work necessary to close the deal by the agreed to date.
You will receive a Statement of Adjustments before the closing date. This document shows an itemized list of the money coming in and going out. Some items, you and the seller will share, such as property tax or water bill payment. The most important item for you to pay attention to is the amount of the money you will need in addition to the mortgage to close the deal.
You will meet with your attorney 24 to 72 hours before the closing to deliver any required funds — closing costs and the remaining down payment. Make payments in the form of a certified cheque, inter-bank transfer, or bank draft.
Your lawyer consummates the transaction by registering the transfer and mortgage paperwork. He or she also arranges for the seller’s attorney to receive any funds. After your attorney informs you of the completion of all necessary tasks, you can pick up the keys to your new home from your real estate agent as determined by the “possession date” spelled out in the Contract of Purchase and Sale.