Whether you're a first time home buyer or this isn't your first rodeo, the process of buying a home can be intimidating. There's a lot of jargon and a lot of legalese, but the most daunting question of all is:
How much is this going to cost me?
Fair question. You've worked hard to save the money for a downpayment on a house - now it's time for you to take the plunge and you're worried about surprises.
To make the whole process a little bit less intimidating, we've broken down the fees associated with a real estate transaction (from the buyer's side) so you can have an idea of how much the whole deal will actually cost.
Let's handle this with a case study.
Buyers: Linda & Greg
Linda and Greg are a young couple who just moved back from Alberta to start a family in Cape Breton. They found a perfect house in Sydney River (for $200,000) and already have plans for a fence for the dogs. They've saved to buy the house and only need a mortgage for $75,000. Let's say, for the sake of this post, that there was no adjustment made to the original purchase price. Linda and Greg's fees on the transaction (on top of the purchase price) will be:
Deed Registration Fee ($100)
When you buy a property you receive a deed from the seller. It's your lawyer's job to register the deed on the parcel register (an online system for all things land and property in Nova Scotia); the province charges a fee of $100 for registering a deed.
Deed Transfer Tax (1.5% of the Purchase Price)
In the CBRM the deed transfer tax is 1.5%. This is money collected from your lawyer when your lawyer registers your deed. On a $200,000 purchase this would be $3,000. There are some exemptions to this, but that's for another post.
Mortgage Registration Fee ($100)
Just like registering the deed in the online system, the province charges a fee of $100 to register your mortgage. Registering the mortgage is the responsibility of your lawyer and is required by your lender as a condition of providing the money for the purchase.
Title Insurance (Starting at $200) or Survey (Starting at $1,000)
Your lawyer will also recommend obtaining either title insurance or a survey of your lot. Title insurance protects you from certain defects with your land which could arise after the sale. A survey is prepared by a qualified Nova Scotia Land Surveyor and (most of the time) is preferable to title insurance because you can deal with problems proactively, rather than after you've already purchased the land. Your lender will require either title insurance or a survey to make sure they're covered in the event the land is something other than what everyone thought.
Legal Fees ($900 to $1,200 + HST)
Of course there are legal fees and of course they range. They range based on the lawyer and on the nature of the transaction. Ultimately, it's best to find a lawyer who is experienced with property transactions and who is attentive to your needs. This is likely the biggest transaction of your life.
Here's the total breakdown for Linda and Greg:
If I were representing Linda and Greg in this transaction, I would contact them ahead of time to let them know the final amount I needed from them in order to close. In this case, that would be $129,830.00 ($204,830 minus $75,000 in mortgage funds). If they obtained a bigger mortgage with a smaller down-payment the picture would look a bit different.
As you can see, the fees for Linda and Greg add up to $4,830.00. Most of that is the $3,000.00 Deed Transfer Tax owing to the municipality. You can see how Linda and Greg, as new home buyers might be surprised by these fees. When it comes to finances it's good to be prepared, especially when you're buying a home.
If you're selling a home, the fees are very different. We'll cover the fees associate with the sale side of a real estate transaction in another post.
How much is this going to cost me?
Fair question. You've worked hard to save the money for a downpayment on a house - now it's time for you to take the plunge and you're worried about surprises.
To make the whole process a little bit less intimidating, we've broken down the fees associated with a real estate transaction (from the buyer's side) so you can have an idea of how much the whole deal will actually cost.
Let's handle this with a case study.
Buyers: Linda & Greg
 |
| Linda & Greg - aren't they cute. |
Deed Registration Fee ($100)
When you buy a property you receive a deed from the seller. It's your lawyer's job to register the deed on the parcel register (an online system for all things land and property in Nova Scotia); the province charges a fee of $100 for registering a deed.
Deed Transfer Tax (1.5% of the Purchase Price)
In the CBRM the deed transfer tax is 1.5%. This is money collected from your lawyer when your lawyer registers your deed. On a $200,000 purchase this would be $3,000. There are some exemptions to this, but that's for another post.
Mortgage Registration Fee ($100)
Just like registering the deed in the online system, the province charges a fee of $100 to register your mortgage. Registering the mortgage is the responsibility of your lawyer and is required by your lender as a condition of providing the money for the purchase.
Title Insurance (Starting at $200) or Survey (Starting at $1,000)
Your lawyer will also recommend obtaining either title insurance or a survey of your lot. Title insurance protects you from certain defects with your land which could arise after the sale. A survey is prepared by a qualified Nova Scotia Land Surveyor and (most of the time) is preferable to title insurance because you can deal with problems proactively, rather than after you've already purchased the land. Your lender will require either title insurance or a survey to make sure they're covered in the event the land is something other than what everyone thought.
Legal Fees ($900 to $1,200 + HST)
Of course there are legal fees and of course they range. They range based on the lawyer and on the nature of the transaction. Ultimately, it's best to find a lawyer who is experienced with property transactions and who is attentive to your needs. This is likely the biggest transaction of your life.
Here's the total breakdown for Linda and Greg:
If I were representing Linda and Greg in this transaction, I would contact them ahead of time to let them know the final amount I needed from them in order to close. In this case, that would be $129,830.00 ($204,830 minus $75,000 in mortgage funds). If they obtained a bigger mortgage with a smaller down-payment the picture would look a bit different.
As you can see, the fees for Linda and Greg add up to $4,830.00. Most of that is the $3,000.00 Deed Transfer Tax owing to the municipality. You can see how Linda and Greg, as new home buyers might be surprised by these fees. When it comes to finances it's good to be prepared, especially when you're buying a home.
If you're selling a home, the fees are very different. We'll cover the fees associate with the sale side of a real estate transaction in another post.
 |
| This post was written by Anna Manley. If you'd like to contact Anna you can send her an email: anna@manleylaw.ca |
