Wandering through the maze of various mortgage closing costs
Many people wonder about how much mortgage closing costs are when purchasing or refinancing a home. To make things simple, I will be providing a general overview of how much it will cost you to close on your new mortgage.
Mortgage Closing Costs – Purchase, Refinance, or Renewal/Switch?
The mortgage closing costs for purchasing a property vary depending on whether you are buying, refinancing, or renewing your mortgage.
Mortgage Closing Costs for Mortgage Renewal/Switch
This is the easiest of the scenarios to provide an answer for, so I will start here. If you are currently with another financial institution and are looking to get a better rate, and you do not wish to borrow more money, then the process is an inexpensive one. I have several mortgage lenders available to me that have a special program available that will cover all the costs of moving from your current financial institution to a new one.
Mortgage Closing Costs for a Refinance
Refinancing is usually a term to describe remortgaging your property before the current mortgage’s maturity date is due, or asking for a mortgage for a larger loan amount than your current mortgage has, or increasing the amortization schedule. This also applies to ALL mortgages that are being moved from most Credit Unions, or are being moved to most Credit Unions.
In this situation, the new mortgage lender may require an appraisal to be done on your property to confirm the value of the property. Appraisals usually cost between $250-$300.
Additionally, the other charge that you will have to pay is solicitor’s fees. The solicitor will receive the mortgage instructions and do all the background work necessary to complete your mortgage. Solicitors fees vary, but you can expect the total fees including disbursements to cost anywhere from $1200-$2000, depending on the type of mortgage and the amount of work that needs to be done to complete the mortgage.
Closing Costs For a Home Purchase
When purchasing a home, the costs are similar to the costs for a refinance, with the possibility of appraisal costs and the requirement of a solicitor. In addition, you will likely want to have an inspection done on the property that would give you detail on the condition of the property. It is highly recommended and could save you from buying a “lemon” (ie grow ops, damaged foundation, leaky homes).
Additionally, there is another cost when purchasing a property in BC called the BC Property Transfer Tax . The BC Property Transfer Tax rate is 1% of the first $200,000 and 2% of every dollar above the first $200,000.
For example, a house costing $500,000, the BC Property Transfer Tax would be:
(1% x $200,000) + ( 2% x $300,000)
This is most likely going to always be your most expensive closing cost when buying a home. The good news for first time homebuyers is that there is an exemption from the BC property Transfer Tax available up to a purchase price of $475,000. Visit my First Time Homebuyers Program page for more information.
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