The following article is a guest post by Brennan Valenzuela, a writer for Ratehub.ca, a website that allows people to compare Canadian mortgage rates. It also features a comprehensive education centre to help address common first-time home buyer questions. Ratehub is a great source for all the latest Canadian mortgage news.
Looking to buy a home in the picturesque land of Prince Edward Island? Now is an opportune time to purchase property in PEI as their average home price is well below the national average of $369,677! The CMHC predicts the average resale price in PEI will moderately increase from $153,000 in 2012 to $155,000 in 2013.
Condo starts last year were strong, especially in Charlottetown. As a result of the increased supply, buyers in PEI have more condo options to choose from.
Mortgage rates in PEI
PEI mortgage rates could see moderate rate hikes in late 2012 since mortgage rates are already hovering at record lows.
So whether you’re eyeing Charlottetown’s lovely Y Lofts or looking for the green and white façade akin to the home of Anne of Green Gables, be sure to consider these purchase costs before you begin your search.
PEI Land Transfer Tax
In PEI, the land transfer tax is also known as the Real Property Transfer Tax. It is calculated at the rate of 1.0% between the sale price or the assessed value of the real property, whichever is greater. For example, the land transfer tax on the average PEI home of $153,000 is $1,530.
It is wise to request the services of a real estate lawyer to handle all the necessary legal paperwork and closing cost submissions. The cost of hiring a lawyer varies, but can range upwards of $1000. Be prepared to also cover the costs of disbursements, including courier and registration costs.
Property Insurance and Title Insurance
To protect your home from damage, consider getting property insurance. The cost will depend on your property’s value, insurance company and municipality. Title insurance is also necessary to protect your ownership and investment in the property. A lender will not finance your home purchase unless they are certain the home is on the land described on the deed and mortgage, in other words: no title insurance, no financing.
Your new home may look pretty on the outside, but a home inspector will be able to point out possible structural flaws. This could save you thousands of dollars in repair costs and take out the guesswork of inspecting the home yourself. The price of a home inspection varies depending on the size of the property, the distance they must travel, and the type of building. Typical prices are in the ballpark of $500.
First Time Home Buyer Rebates
Provincial taxes can put a dent in your wallet. However, a lot can be recovered through first-time home buyer rebates. PEI offers a Land Transfer Tax Rebate which can even offset the full cost for first-time home buyers. The real property transfer tax rebate applies to purchase prices below $200,000, which should cover most homes in the province. In the land transfer tax above, the rebate would cover the full cost of the tax.
You could also qualify for the first-time home buyer’s tax credit which is currently $750. If you are purchasing a home with a partner, the total combined rebate cannot exceed $750. The rebate must be claimed within a year of purchasing the property and should be included in your personal tax return.
So once the legal documents have been handled and the closing costs taken care of, the only thing left for you to do is move in and enjoy the view from the balcony of your new condo. And if you’re lucky, it’ll be at the charming, recently completed Northumberland condo.