What is the Actual Cost of Buying a Home in Kelowna?
Buying a home in Kelowna or anywhere for that matter, right now, can get expensive.
And I’m not just talking about saving up for that downpayment that you are going to need.
I am talking closing costs.
If it’s your first time looking to buy a home in the Okanagan then you should lean into what I’m about to tell you.
Also, this could be for people that are looking to sell that first home and get into their second or third or fourth.
You get a little rusty and may not remember all of what you need for resources considering most people stay in their homes 4-5 years.
I barely remember what I had for breakfast some days, so I can empathize with you!
Alright, let’s get into it.
How Much of Downpayment do I Need to Buy a Home in Kelowna?
The first cost is the most obvious one and that will be your downpayment. The minimum required to put down is 5% up to $500,000.
If you are spending over that threshold then you could be required to put down up to 7% in total, there is a calculation in there that I’m not going to get into, just know it could run as high as 7 points.
Ok, let’s back up a little bit and go back to the beginning of your home shopping experience.
There is no cost for getting pre-approved for financing.
There is no cost to hire me as your Realtor to help you find that home.
There is no cost to get out and look at properties.
There is no cost to write an offer on those property.
Here’s where the cost comes in.
You find the right home, let’s concentrate on a single family property for right now and you make an offer.
Your offer is accepted and you have a few conditions attached to the purchase agreement.
What are the Costs of Home Inspections in Kelowna?
One of them is going to likely be a home inspection.
This will be the first thing that you will be out of pocket for. Home inspectors are going to charge you anywhere between $400 and $700 for the inspection.
It’s not a required thing, but it is CERTAINLY recommended.
Anyone that has worked with me knows my personal home inspection story, won’t get into it here, just know that I won’t stop recommending this, ever.
If you are buying a condo, especially a bareland strata, you could be out of pocket for an inspection as well as a condo document review.
There are a lot of agents here in the Okanagan that will review the docs for you. I don’t offer that service.
The way I look at it is, you hire the right people to do the job. For example, if I’m doing renos on my house, I can knock walls out, I can rip up flooring, I can disconnect wiring.
Basically I know enough to make me dangerous. I am not however, going to rewire the house, install the carpet or do any plumbing. I hire the right pro to do the job.
This is how I look at condo document inspections, hire someone where this is the only thing they do, day in and day out. They know what to look for.
You wouldn’t hire Uncle Jimmy to do your home inspection would you?
Ok enough about that now, just know that a condo doc review is going to run you between $400 and $600 dollars.
So, that bareland strata could run you as high as $1300 for inspections.
Once the inspections come back clean and you waive your conditions, you will have some other costs once before you get to the closing table with your notary or lawyer as well as while you are sitting with them.
The deposit will typically be delivered to the buyer’s agent brokerage, the deposit amount will be what you agreed to in your contract and is different than the downpayment.
The deposit will form part of your downpayment. So if you have a $100,000 purchase and your downpayment is 20% or $20,000 and your put up a deposit of $5000, then the balance owing on your down payment is 15 thousand dollars.
What are the Closing Costs to Buying a Home in Kelowna?
Now that’s clear, let’s get to the closing table.
This is where things get pricey.
Here in BC they have a land transfer tax that is required to be paid on most real estate transactions with some exceptions.
If you are a first time buyer, you could be exempt from paying the tax if your purchase price does not go above $500,000.
There is a partial exemption if the purchase price is less than $525,000.
There are other thresholds that have to be met like being a permanent resident or Canadian citizen, you have to have lived in BC for at least a year prior to purchasing, filed at least 2 income tax returns as a BC resident in the last 6 taxation years as well as never having owned a home or had interest in a home anywhere in the world and you’ve never received a first time home buyers exemption in BC before.
If you aren’t a first time buyer but are buying new then you may also qualify for a full or partial exemption.
This applies to single family homes as well as condos and some other examples that I won’t get in to in the interest of time.
Just keep in mind in order to qualify for this the property value for a full exemption has to be under $700,000 and for a partial exemption it has to be under $800,000.
You won’t be finding a single family home to build in Kelowna for those price points any time soon.
A condo on the other hand might qualify in this market.
How Much is the Land Transfer Tax in Kelowna, BC?
Ok…if you ARE subject to the land transfer tax the calculation is:
1% of the first $200,000 and 2% on the balance up to $2 Million Dollars. This is where most people will fit in to this calculation. If you are looking to spend more than 3 Million, the taxes get kind of stupid.
If you are looking to buy a $700,000 condo here in Kelowna your land transfer tax calculation would wind up being $12 thousand dollars.
This amount is on top of the 7% that you would be required to put down and not including your inspections or legal fees.
Disbursements is what’s next, I usually use this as an example as it’s easy to explain.
Property taxes can be paid yearly or on a monthly basis. Most people, at least in my experience, choose monthly.
But to keep the math simple let’s take the example of someone that pays their taxes at the beginning of the year and the amount is $4 thousand dollars.
You take possession of the home on August 1st.
The seller has lived in the home for those 7 months but has paid for 12.
At the closing table you would be required to pay back the seller for the last 5 months, a prorated amount. This would be an example of one of the disbursements.
Another would be the legal fees which are going to run you anywhere from $1500 to $2500 depending on the property and the registrations on title.
We have covered a lot on this video so let’s recap the up front costs versus the closing table costs:
Up front costs would include:
Your inspections which could run you upwards of $1300
- Your deposit which could be anywhere from $5 thousand to say $30 thousand depending on the size of the purchase. And of course that would be required after the removal of your conditions.
Closing table costs would include:
- Disbursements. Things like property tax.
- Land Transfer Tax.
- Balance of your downpayment.
- Notary or Legal fees.
Alright, that’s all I have for you today. If you are thinking of making a move to the Okanagan, looking to sell your current Kelowna, West Kelowna or Lake Country Home or are looking to purchase your very first property, then we should talk.
Give me a call at 778-716-7527 or shoot me an email firstname.lastname@example.org