# Cost of Home Purchase Fees/Expenses



## peterk (May 16, 2010)

I have a job offer that is providing me with several choices of moving allowance benefits. I've never bought a house, and was hoping that you could help me monetize the following benefits provided regarding purchasing a home; so that I am better informed as to whether I should select these benefits, or a cash payout.

- one home inspection
- one legal survey or real property report
- legal fees and disbursements
- mortgage appraisal and application fee
- mortgage default insurance premium up to $5500


Further details:

- If I choose to buy a house, it will be an apartment, with a slight chance of it being a townhouse, and zero chance of it being a detached home. I'm not sure whether or how a home inspection or legal survey are relevant to the purchasing of an apartment.

- The anticipated purchase price of this apartment is expected to be between 180k-400k. This is such a wide range because my decision on the opulence of the apartment will be strongly influenced by my job satisfaction during the 1st year, and whether I intend on staying for just a couple of years or many.
(I have 1 year after my start date to purchase a home and receive the stated benefits, but must make the decision now whether to take the benefits or payout)

- Assuming an apartment price of 250k and a down payment of 40k, the CMHC premium would be $3675.

Side question: The CMHC insurance is required only for purchases with a down payment below 20%? CMHC's website indicates premium tables for up to a 35% down payment. Is this 20-35% range optional insurance that MAY (but doesn't have to) be purchases by the home buyer? If I can scrounge a 20% DP, I would then be off the hook for any CMHC premium requirements?

Thanks for hanging in 'til the end, guys and gals.


----------



## Just a Guy (Mar 27, 2012)

You don't state which province, so take these as general replies...

Home inspections, mostly a waste on money in my opinion, cost around $500. If you're set on doing it, get an engineer, not and ex-realtor. If you're buying a condo, ask for the engineering report and financials...may cost a couple hundred until you're an owner (or the seller may provide for free). This should tell you the overall state of the building, not your specific unit however.

Reports are about $300, but are usually part of disbursements, or something the seller needs to provide.

Legal fees are a minimum of around $550, plus disbursements usually another $550 at least. Now other lawyers can and will charge more.

The appraisal fee is one of the fees charged by the bank, you also have their legal fees. You used to be able to get them waived, but that's getting very hard these days...their fees like the cmhc fees, are just added to the mortgage usually, but expect $500-$1000

Also, realize that cmhc doesn't protect you, only the bank. You default, you're still on the hook. There is an article I could recommend about this...

As for requiring cmhc, it depends on the bank, most don't require it with 20% down, if they think you're a risk, they may. If you can avoid it, I would.


----------



## kcowan (Jul 1, 2010)

You don't mention the alternative to foregoing these fees. Don't purchase new and make a condition of the offer to get Condo Committee minutes and reports. Avoid CMHC and shop around for a mortgage including all fees. Use a mortgage broker if necessary. Good luck!


----------



## peterk (May 16, 2010)

Ok so I'm looking at about $2500 lost in legal etc. costs, plus whatever the amount CMHC will be.

Kcowan, I'll certainly not be buying anything without seeing the condo board's financials. I assumed that's something that's willingly provided upfront, but are you guys saying that I won't be able to see those documents without paying for them, or making a conditional offer? That seems a bit excessive. I would have thought that was the logical next step after viewing the apartment. 

The cash payout amount isn't within the scope of this thread since the moving allowance benefit covers much more than the house purchase costs. It's only the housing portion that I'm having trouble putting a value on.


----------



## Just a Guy (Mar 27, 2012)

Documents and keys are some of the most profitable income sources for management companies. If you think about how many people may be interested in purchasing a listed condo, you can start to see why.


----------



## Cpt. Fantastic (Feb 3, 2012)

Peterk,

If you're jumping into something new and don't know if it's something you'll like, why buy? It seems most logical to rent, if they have moving allowances, I assume that would cover movers, etc.


----------



## kcowan (Jul 1, 2010)

peterk said:


> Kcowan, I'll certainly not be buying anything without seeing the condo board's financials. I assumed that's something that's willingly provided upfront, but are you guys saying that I won't be able to see those documents without paying for them, or making a conditional offer? That seems a bit excessive. I would have thought that was the logical next step after viewing the apartment.


Some condo boards are easier than others but it would be on conditional offers rather than for any tire kicker. The harder the docs are to get, the more suspicious you should be. Look at the size of the reserve fund and any special assessments in the last 5 years.


----------



## peterk (May 16, 2010)

I intend to rent to start. But It just so happens the cap rate is ridiculous for 1-bed apartments in this city (Fort Mac). $1700/month for a $180000 apartment. I certainly won't be jumping into anything, but it seems here that buying may be the way to go.

Kcowan, I'm sure I'll be back with much more detailed questions about things if I do end up buying. Thanks!


----------



## kcowan (Jul 1, 2010)

I know many investors who have made a killing on property in Ft Mac. But their renters tend to put a lot of wear and tear on the properties. A cousin and her husband got rich in Ft Mac but both died young (well under 70) and I suspect that living there may have contributed. YMMV


----------



## dvelecka (Oct 18, 2012)

peterk said:


> - If I choose to buy a house, it will be an apartment, with a slight chance of it being a townhouse, and zero chance of it being a detached home. I'm not sure whether or how a home inspection or legal survey are relevant to the purchasing of an apartment.


As for purchasing a property in Canada, in my opinion it is best to go forth with a multi-purpose dwelling such as an apartment or townhouse. It will offer higher yields if you do wish to rent it because there is a high demand for such rental properties. Regarding the process, here are some steps you must go through when purchasing property in Canada. Although this article was written for foreign investors, the steps are almost the same for Canadian nationals. http://bestofourmarket.com/2012/09/real-estate-in-canada-how-difficult-is-it/


----------

