Common Buying Costs

Buying a house comes with more than just the cost of the purchase price itself.

Be prepared for all that might come your way!

The additional costs involved in purchasing a home can vary based on the details of the transaction, and are outside the amount borrowed through a mortgage. Some costs will occur on the closing date and be arranged with help of your lawyer, while others will occur before closing during the process of meeting offer conditions. Being well prepared saves stress from financial surprises, and ensures you’ll have the funds available to complete the transaction. 

Here is a list of common costs that buyers may encounter:

Down Payment

The largest upfront cost to a buyer is the mortgage down payment. Buyers should be prepared to pay this down payment to their lender, typically a percentage of the home’s purchase price. This percentage can be 5%, but can increase depending on the situation. Speak to your lender early, so you can properly prepare. 

Home Inspection

While technically paid before closing, the cost of a home inspection is an important consideration for buyers. It’s normally highly recommended to get a home inspection. No home is perfect, and the inspection helps flag any possible issues so you are informed about what you’re getting into. Inspection prices often cost around $500+tax

Basic Water Test

If purchasing a property not on municipal water, it’s highly recommended to have a water test to ensure the potability of the water. If you collect and drop off the water sample yourself, the cost of a basic water test is around $75+tax. Many home inspectors will work the price of a water test into their fees, and handle the collection/drop off of the sample for you.

Moving Company

A voluntary cost – hiring possible movers of your packed personal items. Costs can vary greatly depending on the amount of items to be moved, and the distance they will travel. A 2 bedroom within Fredericton averages 4-6 hours, at an estimated $155+tax/hour.

Storage Trailer or Truck

If doing the packing and moving yourself, buyers should still be prepared to rent a storage trailer or truck like those from U-Haul for moving the contents of their home. 

Contingency Condo Fees

If purchasing a condominium, it’s very common to incur a one time fee that the condominium corporation puts into the contingency fund for major maintenance and emergency repairs.

Appraisal Fee

Lenders may require an appraisal to assess the property’s value, and the buyer may be responsible for this cost. These fees usually range $300-$600+tax

Legal Fees and Disbursements

These cover the cost of hiring a lawyer to handle the legal aspects of the transaction. It’s recommended to acquire a flat rate to cover all necessary legal steps. For a standard purchase and mortgage transaction, these fees often range from $600-$1000+tax.

Land Transfer Tax

This tax is applied when ownership of a property is transferred and varies depending on the purchase price. This government fee is usually 1% of the purchase price (or assessed value if higher). 

Property Survey

If a current survey is not available, the buyer may want a new one to verify property boundaries and structures. Some lenders will actually require a survey, which costs $700-$2000+tax if one is not currently available through the seller.

Title Search

Properties not already under the NB Land Titles System are required to be registered. This cost is $150-$300+tax for a full title search from a lawyer, plus the government fee of $82/parcel (PID). If the property is already under the NB Land Titles System, then only a sub search is required at $80-$100+tax.

Registration

The government fee is $85/document/PID that is being registered. The average transaction has 1 piece of land with its transfer and then 1 mortgage, which gives a total of $170.

Title Insurance

Many banks will accept title insurance in lieu of a current survey. Many buyers choose to purchase title insurance to protect against potential issues with the property title, whether required by the bank or not. Title insurance can often be acquired through your lawyer, for $280+tax or less.

Property Adjustments

This involves reimbursing the seller for any prepaid expenses. Adjustments on an oil or propane tank normally has the seller arrange to have the tank filled on closing day, and the buyer then pays for this full tank through the lawyer on closing day. Water and sewer is only adjusted in areas where it’s pre-paid, like Oromocto and New Maryland.

Property Tax

Property taxes are adjusted on closing day, to accommodate for what the buyer may owe the seller for the time they have taken possession of the home. Depending on your arrangements, this may be done with your lawyer or through your bank if these taxes are being paid alongside the mortgage.

Harmonized Sales Tax (HST)

As a buyer purchasing used residential housing, HST is generally not applicable. Purchasing a new home from a builder would be subject to sales tax, but this tax is usually already reflected in the listing price, and any offers you make should be inclusive of any potential HST charges. As such, when buying a used residential home, you would not expect to see HST fees above and beyond the agreed to purchase price.

It’s essential for buyers to work closely with their lawyer, mortgage lender and REALTOR®️ to get an accurate estimate of their specific transaction costs. Being well prepared assists in a smooth transaction, and helps ensure you can secure the property you want without serious financial hiccups. 

For a more detailed breakdown of the legal and closing costs of buying a home, visit the link provided for additional information from Youssef Law Group.