Closing Costs are expenses that need to be paid upon the completion of a purchase,that cannot be added to your mortgage. They are out of pocket expenses in addition to your down payment.

The Closing Costs on the purchase of Real Estate can vary greatly in British Columbia, depending on whether you are a First Time Home Buyer (FTHB) or any other type of purchaser. The reason is Property Transfer Tax (PTT). If you are a FTHB and you are buying a home under $425,000, you are exempt from PTT. There are a few stipulations, but usually that is the case. All other purchasers of real estate have to pay PTT upon closing, and it is a significant cost.

Here are the typical closing costs for a $500,000 resale purchase:
Property Transfer Tax (PTT) $8000
Inspection $400
Lawyer / Notary Fees $1000
Movers $500
Adjustments (prepaid expenses) varies (see below for explanation)

Adjustment costs are certain items that the previous seller may have pre-paid, that you then have to compensate. Examples of such are property taxes, strata fees, and levies. So for example say you purchase this property and move in on September 15th.

The property taxes for this place are $1600 and the monthly strata maintenance fees are $250.

Prepaid taxes are: (107 days remain in the year / 365 days) x $1600 = $470
Prepaid strata fees: (15 days remain in the month / 30 days) x $250 = $125
Therefore the Adjustments costs on this purchase would be $595.
Total Closing Cost: $10495

Property Transfer Tax is a calculated at 1% on the first $200,000, and 2% on the remaining balance. And again this is exempt for First Time Home Buyers up to $425,000 (and a straight sliding scale up to $450,000).

Here are the typical closing costs for a resale purchase by a FTHB up to $425,000:
Property Transfer Tax (PTT) Exempt
Inspection $400
Lawyer / Notary Fees $1000
Movers $500 (or $200 for van, pizza, and beer)
Adjustments (prepaid expenses) varies (see below for explaination)

Adjustments for this might be only $450, bringing the total closing cost to: $2050 (a significant difference).

Any other closing costs such as Mortgage Loan Insurance (applicable for down-payments less than 20%) can and will be included into your mortgage.
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