Buying a home is one of the biggest financial decisions you will ever make. In British Columbia, the red hot real estate market means that this decision is even more important. Whether you are in the market for an investment property or a permanent island getaway, you will want to ensure that you understand the hidden costs that come into play. 

At Jeff King Real Estate, we know that buying in the Nanaimo real estate market can mean  competing offers, arranging for financing, and everything else that can make buying a home so stressful. That’s why we have prepared this guide to the common closing costs in British Columbia.

We want you to feel prepared and comfortable when you are looking for real estate in Nanaimo.

Closing Costs: Explained

Determining your budget for what type of home you want to shop around is only the first step when you are starting to look for real estate in Nanaimo. Once you have arrived on a reasonable budget and taken a look at your local listings to make sure that you are being realistic, you should start to factor in closing costs.

A safe estimate for adding closing costs to your budget is 2.5% of the purchase price. This includes costs like legal fees, property transfer tax and home inspections.

2.5% on a home purchase on Vancouver Island is nothing to turn your nose up at. $25,000 on a million dollar home is still a large expense, and you need to be prepared. Of course, some homebuyers will wonder if they can cut costs at the closing cost stage of the game. Here’s why this isn’t a good idea.

Many closing costs are required by the bank issuing the mortgage or the government, and can’t be reduced.

Other costs like property site surveys or real estate lawyer fees can be considered optional. But would you really want to gamble on the largest purchase you will make in your lifetime? This can lead to some major long term consequences – so we recommend taking closing costs seriously.

Here are the real costs of buying a home in British Columbia.

Mortgage Application Fee

A lender may charge a fee of a few hundred dollars to process your mortgage application.

Title Insurance

Title insurance rates protect the buyer and lender from title fraud and municipal work orders, and will likely be included as a part of your legal services. This cost changes based on the value of the home, and most packages will be in the low hundreds of dollars.

Property Insurance

This insurance must be purchased before your mortgage lender will allow funds to be released for the purchase. This protects the buyer from losses due to natural disasters like floods or fires (a very important consideration in British Columbia).

Additional Insurance

Approval for a mortgage means that it is also important to buy life, disability, or other insurance. A sudden change in health or employment can affect your income and ability to afford paying for the house so other insurance is crucial.

Home Inspection

Once your offer has been accepted, you will need to complete your due diligence before you seal the deal. Whether the home is new or old, problems in the structure or on the property can derail that happy  “new home” feeling pretty quickly. This costs roughly $500.

Home Appraisal

Your lender may require this as a condition of your mortgage. This is usually in the $200-$500 range, and is more common when buyers make a down payment of less than 25% of the home’s value.

Property Site Survey

This is an important step for any home where you plan on putting up a fence or delineating your property in another way. For a few hundred dollars, you will have confirmation of the boundaries of your property.

Land Transfer Tax

This tax is set at  a 1% rate for the first $200000 of the home’s purchase price, 2% up to $2000000, and 3% on anything beyond that price. There may be other considerations to be taken, which can be reviewed on the Province of British Columbia website.  With sky-high home prices becoming a reality in more BC cities, this is an important consideration.

Legal Fees

Hiring a real estate lawyer is essential for many real estate purchases, since they will ensure you do not inadvertently miss any essential paperwork or fees. Be prepared to spend around $1500 on legal fees for buying a house in BC.

GST

Some homes, like new builds or those that have undergone significant renovations are eligible for a GST payment. This tax will also be applied to legal fees and any other “service-based” payments listed above. Try this tax calculator to get a good idea of rates for your budget.

Property Taxes & Utilities

Depending on the property, prepaid property taxes, utilities, and even strata fees may need to be reimbursed to the seller from the closing date onward.

Preparing Yourself Costs of Buying a Home

Want to know the real costs of buying a home in the Nanaimo real estate market? Talk to a top Nanaimo realtor with experience buying and selling properties on Vancouver Island. 

There’s no substitute for real experience in the area, and Jeff King Real Estate can get you on the right track for the most important purchase of your life.

Give us a call at 250.756.2112, or leave us a message asking about BC closing costs, and we will start your journey of buying a home in beautiful Nanaimo.

Although many people look forward to having a fresh start in a new place, feeling stressed about the transition and the moving process itself is very common. Here are a few tips to help make it easier.

1. Lighten up. Whether you’re hiring movers or renting a truck and getting help with the heavy lifting, it pays to lighten the load of stuff you plan to move. Now is the time to go through your belongings and be intentional about your goal– if it’s broken, underused or you don’t see yourself needing it in the future, it’s time to donate it. If you don’t use it now, chances are you won’t use it at all in your new home.

Sell or donate unused items that are still in good condition. Sites like Kijiji allow you to sell your items easily. Start the process at least a month before your moving date. Similarly, look into local charities that accept donations and be sure to get a receipt if you plan to write it off on your taxes.

Recycle items that are broken or worn out. Call a junk removal service to responsibly dispose of items that should not end up in our landfills.

2. Take breaks. One of the reasons people find moving so stressful is they’re overwhelmed by all the tasks that need to get done. While trying to stay on top of everything, it’s easy to forget to take breaks and eat. Taking a break will give you the energy you need to recharge before you tackle the next room or task.

Pack a bag of snacks to munch on during the day, and don’t forget to stay hydrated by drinking lots of water.

Set an alarm halfway through the day to take a meal break. Order pizza or sandwiches, especially if you have others helping out.

If you find yourself getting anxious, take a few minutes to breathe. Repeat a mantra that helps you focus and calms your spirit.

3. Pack smart. Be mindful of what you are packing and when you pack it to ensure your valuables are not lost or broken.

Start early. The earlier you start packing, the better you’ll be able to organize and prioritize your items. If you know you’re not going to use it until after you move, pack it away.

Pack by room and number your boxes. In a notebook or app, write what’s in each box (e.g., Box 5 Kitchen: utensils, blender, crock pot). Take it a step further and pick up coloured stickers from an office store to colour-code each box by room.

Pack valuable items yourself. After all, only you can give them the extra care they need to survive the move in one piece. Use bubble wrap or wrap the items in soft linens or clothing, such as pillow cases and bedding, towels and t-shirts.

Will you need certain items right away, such as toiletries, work clothes or home office items? Pack them in clear plastic bins. This saves you from having to open all of your boxes to find what you need.

Here are time-tested tips to help you save more.

1. Limit spending on luxury or non-essential items. It’s tough to sacrifice the luxuries you love to save for a big purchase, but you’ll be surprised how much you save. Visualize your new home every time you are tempted to spend money on luxuries, like a spa day or nonessential items, or other expensive extras, and put that cash toward a down payment.

2. Spend less on entertainment. Saving money doesn’t mean you have to sacrifice your entertainment budget. Instead of splurging on restaurants several times a week, cook at home or take a cooking class. You’ll learn new skills and improve the ones you have, while making a great meal in the process. If you like going to movies, rent one online from M-GO (on Smart TV and Roku), which often has movies still in theaters for a lower rental rate than buying a ticket. There’s always an alternative that let’s you have fun while saving.

3. Cut your clothing budget. Instead of splurging on new clothes at the mall or whenever an email announcing a sale pops into your inbox, take a second to think about why you’re saving money in the first place. Set aside a clothing budget at the beginning of the month—when the money is gone there’s no more shopping for the month. Discipline shows real results.

4. Postpone a vacation. Many first-time homebuyers put off taking an expensive vacation while saving for a down payment. Instead of going somewhere exotic or far away, head somewhere closer for a long weekend. Or, rediscover the sites of your city or town. You’ll save money and still enjoy the benefits of time away.

5. Avoid an unnecessary purchase.Do you really need a new car right now? Try to postpone making large purchases until after you’ve bought a home, and you’ll get in to your new home that much quicker.

6. Think about a second job. If you’ve cut or limited your spending as much as you can and would like to save even more money, you might consider getting a second job. Brush off the bartending skills you honed in college, teach a class at your local community centre or start a side gig as the neighbourhood dog walker. That extra money you earn is pure down payment bonus money.

When you have found a home you are interested in buying, I will walk you through the process of drafting an offer to purchase. Then, I will communicate the offer to the seller or the seller’s real estate agent for you. Some properties are in demand and you will not be the only interested party making an offer. I will assist you in generating an offer that is reasonable and protects your interests using specified terms and conditions.

An offer can be drafted with or without conditions; an offer without conditions is known as a firm offer and one with conditions is known as a conditional offer. A conditional offer represents the party with the placement of certain conditions on the purchase. Some of these conditions could be “subject to financing approval”, “subject to the strata council allowing pets”, “subject to the buyer’s house selling”, “subject to an approved home inspection”, among many others.

The seller may accept your initial offer, reject your offer or present a counter-offer. The counter-offer may differ from your original offer in respect to price, conditions, the closing date or any other items. Offers can be countered back and forth between the parties until one of you accepts or rejects, ending the negotiations.

There are many components of an offer that you should be aware of and understand. I will be happy to answer your questions and explain the entire process to you so that you are comfortable with the steps involved.

Terms: An offer includes certain “terms”, which specify the total price offered and how the financing will be arranged, such as if you will arrange your own with a financial institution or mortgage broker or if you wish to take over the seller’s mortgage (assumability).

Inclusions and Exclusions: These are specifications within the offer that detail the items to be included or excluded from the purchase of the property. Typical inclusions are appliances, window coverings, fixtures and decorative pieces.

Deposit: A deposit is usually given from the buyer to the seller as a token of the buyer’s assurance and intention to buy the property involved. The deposit is applied against the purchase price of the home once the sale has closed. I will can assist you in proposing a certain and appropriate amount for the deposit.

Conditions: Items that are usually put in place to protect a party’s interests upon selling or buying the property and refer to things that must occur or be in place before the sale closes.

Possession or Closing Date: This is usually the date that the legal ownership of the property transfers from the seller to the buyer and, unless otherwise noted, when the funds for the purchase are concluded.

Purchase Price: This is the amount that the buyer is offering to pay for the property. The price is usually dependent on market conditions and may differ from the seller’s current asking price.

A home inspection is an objective visual examination of a home’s structure and systems. Why get a home inspection?
There are a number of reasons why I recommend a home inspection including:

• To ensure you are not surprised by major defects
• So you can be advised about the various elements of the home including – heating and cooling systems, structure, electrical and plumbing
• To learn about how the mechanical systems work and need to be maintained

Most homeowners are not experts in the numerous components of house construction. A third party can be objective as there is no emotional attachment to the property.

Who should you hire?

Home inspectors are often referred by family or friends. Your Sales agent can also provide you with a list of inspectors. Look for one that is trained and certified by a national organization such as Canadian Association of Home Inspectors (CAHI) or National Institute of Building Inspectors (NIBI) and who has errors and omissions insurance. Do not hire someone who will do any suggested work due to the conflict of interest.

What does it cost?

Costs vary depending on a number of factors including: size and location of the home, features, age, and services required. Additional services may include radon, septic and well testing. Your Sales agent can assist you in obtaining a quote from a potential inspector before you enlist his/her services.

When should you call?

Order the inspection after your offer has been accepted. The contact will stipulate the length of time you have to complete the inspection.

What is involved?

The home inspection will determine the structural and mechanical soundness of the home. Your home inspector can identify existing and potential problem areas, suggest possible solutions and provide estimates for the cost of the work required. You will receive a report outlining the inspection findings. You should accompany the home inspector during the inspection or arrange to meet them at the home so they can walk you through the report. If as a result of the inspection, you have further concerns, have a specialist in that area conduct a more extensive examination.

If you like waterfront living and the downtown lifestyle, then Pacifica is for you. Boldly stated in downtown Nanaimo, Pacifica sits majestically on the water’s edge overlooking the sea plane, ferries and people enjoying the active live.  Pacifica brings a new dimension to Condo living in Nanaimo and each unit has its own unique view from a covered patio*.  Take a look at the video and call me if you would like to have a personal tour. Jeff King at 250-751-4902.

Departure Bay

Meeting your lawyer as a buyer in a real estate deal is a simple process. Once you have an accepted Contract of Purchase and Sale and subjects are removed your realtor will need the name and contact information for your lawyer.  Your realtor’s office will send a copy of the Contract to your lawyer who will open a file, do a search and commence document preparation.

You will normally meet with your lawyer to sign all the necessary paperwork a few days before the completion date.  The lawyer and his staff will have prepared the seller’s documents, a property purchase tax form, a statement of adjustments and all mortgage documents (if any) and will act as a witness to your signing of the documents.

At that meeting the lawyer will review and copy two pieces of your identification to confirm your identity and review the title search and the purchase transaction with you.  This is your opportunity to ask all legal questions you may have.  You can expect that meeting to last from half an hour to an hour.

Information provided by Stuart Wood of Wood and Company.  Stuart can be reached at 250-751-8135 or email him at [email protected]. Get in touch with Jeff King here.