The total amount of money you will need when you purchase a home will extend beyond your down payment. In addition, you will need to save the necessary funds to cover the relevant closing costs. The total amount required can vary based on several factors.
Here are the key elements to closing costs in BC.
BC Closing Costs
Land Transfer Tax
Property tax adjustments
How much are closing costs in BC?
Land Transfer Tax is the largest portion of your closing costs will go towards also know as LTT. British Columbia provides land transfer tax rebates for first-time homebuyers. Homes purchased for $500,000 or less will receive a full refund. For homes with a purchase price of between $500,000 and $525,000, a partial refund is given. Try the calculator here to get an idea of what the cost would be.
First-time homebuyer eligibility in British Columbia
You qualify as a first-time homebuyer if:
- You are a Canadian citizen or a permanent resident of Canada.
- You have lived in BC for 12 consecutive months before the property is registered, or you have filed 2 years of income taxes in BC in the past six years.
- You have never owned a home anywhere else in the world at any time.
- You have never received a first-time homebuyers’ refund or exception.
Legal fees and disbursements. This includes the base fee your Real Estate Lawyer or Notary charges as well as search fees etc.
Title Insurance. This protects your home against potential ownership disputes. It is arranged through your lawyer.
Interest adjustment. If you purchase your home on the 15th of the month and the lender requires mortgage payments on the 1st of each month, you will be required to pay an interest adjustment amount for the two-week difference.
Property tax adjustment. If the current homeowners have paid their property taxes, you will be required to reimburse them the pro-rated amount from the date you get the home until the end of the pre-paid date.
Closing costs documents required
Lenders will require all borrowers to show evidence of 1.5% of the purchase price to be made available for closing costs. This must be saved from own resources and not borrowed – this amount is in addition to the required down payment.
If you are refinancing your home, you are not required to pay Land Transfer Tax, you will be required to pay legal fees and disbursements as well as title insurance though.
Who manages closing costs in BC?
All the mentioned costs are collected by your Real Estate Lawyer prior to closing. They will provide you with a Trust Ledger summary outlining each of these items in detail and the law office will disburse the funds on your behalf – all you must do is show up with a bank draft!
Understanding how much you need for closing costs, in advance of your closing date, is critical to getting the keys to your new home on the scheduled date.
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