Closing Costs - Purchasing a home
More and more we are hearing from clients how surprised they are at the fees involved in purchasing a home. I am including the typical closing costs involved in purchasing a home of $180,000. Costs can differ from company to company, but they should generally be this amount:
Payable to the government of PEI:
Deed Registration Fee: $375
Mortgage Registration Fee: $100 for collateral mortgage OR $375 for mortgage of $150,000 - $180,000.
Land transfer tax: 1% of the purchase price or the assessment of property (whichever is higher). $1800 on a purchase of $180,000. This tax can be waived for first time home buyers who have lived on PEI for at least six months prior to the home purchase.
Depending on bank requirements, you will also need either a Plot plan ($345 to $375 depending on the company); or Title Insurance: $275
Legal fees: These can vary according to companies or even lawyers within companies. It pays to shop around to get the best fee. And be sure to ask the lawyer what this fee includes. The suggested fee is $1500 but many lawyers will do it for less. The fee often depends on how much work is involved with the bank/mortgage company.
Disbursements and taxes on legal fees is approximately $200. Search fees, photocopies, postage, etc can be approximately $125.
When you purchase a property, the owners fill the oil tank of the home and submit the receipt to their lawyer. The cost of this full tank of oil is included in your closing costs. Depending on the price of oil at that time, it can be upwards of $800. If the owner has paid their property taxes, you will need to reimburse them for any they have paid in advance. For example, if you take ownership in July and they have paid their taxes up until December, you will need to pay them for the months they have paid but won't be living there. If there is a propane stove or fireplace involved in the sale, this tank is also filled and you are responsible for that expense as well. You will also need to take over the propane lease in this scenario.
If the home is on a well, you will need to pay for a water test before the closing day. This can run around $150 - $200. The cost will depend on the results of the test. If the first result comes back okay, no further testing is required. If the results are unsatisfactory, there needs to be more tests and the third party tester may charge you for mileage.
We hope this breakdown is helpful to purchasers and make your final meeting with your lawyer a bit less stressful as you will be expecting these charges on your final bill.
Visit our website at http://www.peihouses.com for more helpful information.