Purchasing real estate in Calgary can be a costly endeavour. For many homebuyers, a purchase becomes very stressful financially. That usually happens because the buyer is unaware of some of the expenses they will incur, and therefore, they are unprepared. Here’s an overview of practically everything that could come up during a home purchase in Calgary. Please note that all costs are approximate.
You should be aware that your lender will insist that you put a little money into your home purchase from the start. You’ll need somewhere between 5% and 20% of the purchase price, depending on your personal circumstances. If buying a home with a Calgary Realtor a portion of your deposit is held by the listing brokerage. If buying a private sale in Calgary the deposit should be held with your lawyer in trust.
Your lender may want to order an appraisal on the property you purchase to ensure that you’ve agreed to pay a fair price for the property and that they are not lending too much money on the home. The approximate cost of an appraisal in Calgary is $350 to $500 and can go much higher for exceptionally large properties, or properties located outside of the city.
Mortgage Application Fee
In the past, many lenders have charged a mortgage application fee to process your request for financing. Most major lenders in Calgary have stopped doing so. It shouldn’t take much shopping around to find a lender that will not charge. This fee was typically between $70 – $150.
CMHC Application Fee
If you are planning on taking a high ratio mortgage (down payment of less than 20%) you’ll have to pay a CMHC application fee of $235. However, this fee does include your appraisal, if one is deemed necessary. Additionally, you will be charged an insurance premium that ranges from .5% to 3.75% of the mortgage amount. However, this fee is usually added to the total mortgage amount as opposed to being paid upfront.
Home Inspection Fee
This is really important!! Please set aside a budget of $350 to $550 for this expense. Again, this expense can potentially be higher for rather large homes, unique properties, or properties located out of the city.
Home Owners Association (HOA)
Many neighbourhoods in Calgary have what is called Home Owners Associations. These associations are responsible for improving and maintaining areas such as playgrounds, bike paths, parks etc. In some cases, if the seller has paid the HOA fees for the year you will have to reimburse the seller on a pro-rated basis. HOA fees in Calgary vary depending on the neighbourhood but on average the fees are around $250.00 per year.
Your lender will require you to purchase insurance to protect yourself against a loss due to fire or other types of tragedies. You will also likely want to protect the home’s contents. A home insurance policy can cost as little as $500 and will increase in relation to the value of the home you’re purchasing and the value of your personal effects. An insurance broker can give you a good idea of how much you should budget. Just let them know how much you plan to spend on a home and the approximate value of your personal belongings.
Land Transfer Tax
At the present time, there is no land transfer tax in effect in Alberta but the government has been talking about implementing a transfer tax.
Budget approximately $300 for various utility connections.
There may be certain adjustment costs that apply to your purchase that you should be aware of in advance. The seller may have already paid the local property taxes beyond the date of possession. In such cases, the buyer will reimburse the seller on a pro-rated basis, from the date of possession to the end of the tax period. You may also be required to pay the seller an interest adjustment on any portion of the purchase price not received by the seller at possession.
Registration of Title
You must register your title with SPIN 2 Alberta Land Titles. This cost varies depending on the home’s value. This cost can typically be quoted by a lawyer and billed to you as a disbursement.
If you are taking a mortgage to finance a portion of your home purchase, the lender will require that the mortgage be registered against the property. This cost varies depending on the home’s value. This cost can typically be quoted by a lawyer and billed to you as a disbursement.
The lawyer that handles your purchase will want to search the property’s title and perform a tax search to ensure that you receive a clear title to the home. They will chargeback any expense that is incurred on your behalf to close the transaction including photocopies, courier expenses, etc. These “other disbursements” are typically in the area of $110 to $250.
The lawyer’s fee obviously varies with the amount of work a given file requires. They will usually charge a fee of $500 to $700 to register the property title. If there is a mortgage, the lawyer will charge a similar fee to prepare and register the mortgage against the title of the property. In general, you can bank on a minimum of $900.00 with an average of around $1,300 for legal fees including disbursements listed above.
Real Property Report
Lender’s usually require these reports to verify that the building is situated on the property and is located within the boundaries of the property. In many cases, the seller will have a real property report in their possession. Always request that the seller provide one in your offer to purchase. If the seller is unable or unwilling to provide one they cost $600 to $800 depending on which geomatics company surveys the property.
If you decide to hire a professional mover there will obviously be additional costs involved that will vary significantly depending on the distance of the move and the amount of property to be moved. It is a good idea to call a few movers for a quote.
Generally, budgeting 1.5% – 2% of the purchase price of your home for incidentals and closing costs will provide enough funds to cover your expenses.