Buying Costs

What are the costs associated with buying a home in Alberta?

What are the costs involved in buying a home with a mortgage in Alberta, in addition to the downpayment? Let’s do some sample calculations based on the purchase of a $500,000 home. 

1. Down Payment

• Minimum Requirement: 5% of the home price.
• Example: For a $500,000 home, the minimum down payment is $25,000.
• Deposits: Any deposit paid (e.g., $15,000) counts toward your down payment. You’d need an additional $10,000 to meet the $25,000 requirement.

2. Home Inspection (Optional but highly recommended)

• Cost: Approximately $550 plus GST.

3. Appraisal

• Cost: Around $350 plus GST.
• Sometimes required by lenders for mortgages to confirm the property’s value. Sometimes the lender may pay, but usually, the buyer is responsible.

4. Moving Costs

• Cost: Varies widely.
• Options range from moves with friends to hiring professional movers, which can cost thousands depending on distance.

5. GST

• Resale Homes: No GST.
• New Homes: GST is usually included in the price. Review the purchase contract carefully.

6. Utility Hookups

• Cost: You may need to provide a deposit to your utility provider.

7. Insurance Costs

• Home Insurance: Required for mortgage approval.
• Factors: Costs vary based on the home’s age, coverage, and deductible.

8. Mortgage Insurance

• When Applicable: Required if your down payment is less than 20%.
• Cost: Added to your mortgage; no upfront payment is needed.

9. REALTOR® Fees

• Cost: Typically paid by the seller from the sale proceeds.

10. Real Property Report (RPR) and Compliance

• Cost: This is normally provided by the seller per the contract.
  • RPR: Around $800 plus GST.
  • Compliance Letter: Approximately $150 plus GST (from the City of Lethbridge).

Legal Fees: The Lawyer’s Bill

Your lawyer will charge fees and disbursements. As of October 2024, Land Transfer and registration fees have increased. Here’s what to expect:

1. Legal Fees

• Cost: Around $1,200 for purchases involving a mortgage (you can call around to get quotes as this may vary).

2. Land Transfer and Registration Fees

• Changes (as of October 2024): Fees increased significantly.
• Calculations for a $500,000 Home:
  • Mortgage Registration Fee: $50 base + $5 per $5,000 of the mortgage amount.
    • $50 + ($5 × 100) = $550.
  • Land Transfer Fee: $50 base + $5 per $5,000 of the property value.
    • $50 + ($5 × 100) = $550.

3. Title Insurance

• Cost: $250–$400 plus GST.
• When Required: Some lenders or sellers may require it.

4. Adjustments for Prepaid Expenses

• Example: Reimbursement for prepaid property taxes, condo fees, or utilities.
  • Calculation: For $6,000 annual property taxes and a November 1st move-in date:
    • 2 months (1/6 of the year) = $1,000 owed to the seller.

5. Disbursements

Additional small charges on the lawyer’s bill.  Here are a few examples of what you might find on your bill. They have different names, but many of them are administration fees. 

• File processing fee: $30
• Online fee: $15
• Administration fee: $20
• Courier charges: $15
• Fax fees: $10
• Photocopies: $22
• Postage: $10.63
• Solicitor bank recoverable: $28
• Land Titles courier: $9
• Corporate registry searches: $14
• Land Titles searches: $30
• Tax certificate: $39

Total Example Cost: Around $250

 

Billy and Sally are ready to buy a resale home for $500,000 and they will move in on November 1st.  What will be some of their expenses? 

		GST included where applicable.
1	Deposit & Down payment	$25,000.00
2	Home Inspection	$577.50
3	Appraisal	$367.50
4	Moving Costs	$2,000.00
6	Legal Fees	$1,260.00
7	Mortgage registration fee	$550.00
8	Land transfer fee	$550.00
9	Tax adjustment	$1,000.00
10	Disbursements at law office	$250.00
		$31,555.00
	Upfront costs	Total

 

The above is just a sample but it should give you an idea.  You may have other costs that you need to budget for like new appliances, renovations, or cleaning.  If you are planning on having bridge financing, there are extra costs involved in that as well.  Be sure to consult with your REALTOR®, lawyer, and mortgage professional if you have questions about potential costs.