Expenses to Expect when buying a condo in Vancouver, BC
Budgeting for a new condo can it’s very simple. Not only are there mortgage installments and the down payment to consider, there are a host of other—sometimes unexpected—expenses to add to the equation. The last thing you want is to be caught financially unprepared, blindsided by taxes and other hidden costs on closing day.
These expenses vary: some of them are one-time costs, while others will take the form of monthly or yearly installments. Some may not even apply to your particular case. But it’s best to educate yourself about all the possibilities, so you will be prepared for any situation, armed with the knowledge to budget accordingly for your move. Use the following list to determine which costs will apply to your situation prior to structuring your budget:
1. Purchase offer deposit: the amount of the deposit is not set in stone, but it is usually an amount that ranges between the 5% and 10% of the purchase price.
- Inspection by certified building inspector.
- Appraisal fee: Your lending institution may request an appraisal of the property. The cost of this appraisal is your responsibility or sometimes you can negotiate the waving of this fee or you can request the cost of the appraisal to be added into your mortgage.
- Mortgage application at your lending institution.
- 12% HST: Harmonized Sales Tax will be effective as of July 1, 2010 in the province of British Columbia. NOTE: this tax applies to newly built condos only.
- Legal fees: A lawyer should be involved in every real estate transaction to review all paperwork. Experience and rates offered by lawyers range quite a bit, so shop around before you hire. In the province or British Columbia you can also use a Notary Public.
- Condo owner’s insurance: Your condo will serve as security against your loan for your financial institution. Most of the time your condo is covered by the strata or building insurance, but this insurance does not cover the contents of your condo as well as any problems that you condo may cause to others, for example: if the water leaks out from your clothes washer to the units below yours, you will need to pay for any repairs, that is why advisable to always have extra insurance to cover this unfortunate events. Some buildings will require you to have it and request proof as soon as you move into the building.
- Property Transfer Tax: Also known as PTT, this tax applies in any situation in which a property changes owners and can vary greatly. PTT is calculated as follows: 1% of the first $200,000 and 2% on the remaining amount. For example: if the purchase price of a property is $500,000, the PPT will be $2,000 on the first $200,000 + $6,000 on the remaining 2% of $300,000. The total would be $2,000 + $6,000= $8,000.
- Moving expenses.
- Service charges: Any utilities you arrange for at your new condo, such as cable or telephone, may come with an installation fee.
- Interest adjustments.
- Renovation of new condo: In order to "make it their own," many new condo owners like to paint or invest in other renovations prior to or upon moving in to their new condo. If this is your plan, budget accordingly.
- Property taxes.
- Maintenance fees: If you are moving to a condominium, you will likely be charged a monthly condo fee which covers the costs of common area maintenance and in some cases heat.
- Move in fee: this is a one time fee, the charge depends on the building and it ranges between $100 to $200 dollars.
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