What extra costs are part of my mortgage?
Lawyer Costs: We estimate that it’s about $1500. This includes all the legal fees, title insurance, etc. This is not
something we charge, it’s just an estimate of what your lawyer will charge.
Property Transfer Tax: This is a tax applicable in both British Columbia and Ontario. The tax is charged as 1% of
the first $200,000 of the purchase price and 2% of the balance of the purchase price. If you have never owned
property anywhere in the world, you will probably qualify for an exemption on this. In the case of two people buying
a home, we have a strategy where you may also be exempt on your next house. This will save you thousands, so
be sure to make sure we have talked about this, if we haven’t already.
Here’s some more information on Property Transfer Taxes: http://www2.gov.bc.ca/gov/content/taxes/property-
taxes/property-transfer-tax/understand/exemptions
Property Tax: You will have to pay the seller back for any property taxes they have paid. For example if the owner
paid $2000 in July, and you buy in December, you will have to pay $1000 back. A very confusing part of this can be
if the lender is paying your property taxes. In this case, upon starting the loan they will begin collecting for the next
tax year. With most tax years beginning in July, there is a strong possibility that when you buy a home you will be
behind in the tax year. As a result, you can expect that your property tax payments will reflect that in the coming
year. If you are less than four months until property taxes are due, you will have to pay your property taxes upfront
at the lawyer at the time of closing.
CMHC or Default Insurance Fee: You will see this on your documents at the lawyer. This is not a cost you have to
pay, it is added to your mortgage. There is no way around it, as the government adds this to every mortgage where
less than 20% is put down as a down payment. This insurance protects the lender so that if you default on your
payments, the government pays back the money the lender has lost. This is not to be confused with house
insurance or life and disability insurance.
Lender and Broker Fees: These are fees charged by the lender and deducted from the money you are getting.
The broker fees are not actually given to us, the brokers, in their entirety. The broker fees are also paid to the
lender and then shared with the brokers.
