The document outlines various costs involved in purchasing a home, including the down payment, inspection fees, mortgage application fees, appraisal fees, sales taxes, service connection fees, insurance costs for high ratio mortgages, legal fees, closing or adjustment costs, land transfer tax, and potential moving or new home costs. It provides an example calculating the land transfer tax for a $225,000 home purchase in Manitoba.

1. Costs involved in Purchasing a Home
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3. Initial Cost
The Down Payment
­ that portion of the purchase price you provide yourself.
How does the value of your downpayment affect the
total cost of your home?
The larger the down payment, the less your home
will cost in the long run. With a smaller mortgage,
interest costs will be lower and over time, this will
amount to a significant savings.
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4. Other Costs????
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5. Inspection Fee
A cost to have the home inspected before you finalize
the offer to purchase. Looking for areas needing
extensive repairs, and checking to see if home is
structurally sound.
Mortgage Application Fee
A fee charged by the financial institution for
processing your mortgage application.
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6. Appraisal Fee
A fee charged to you by your financial institution to
have the home appraised to determine its value.
Sales Taxes
When purchasing a new home, (newly built)GST is charged
Service Charges
Fees for setting up your utilities, hydro, telephone, cable
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7. Insurance Cost for High Ratio Mortgages
If you have less than 25% downpayment your
mortgage classifies as High Ratio. You pay an extra
1.25% ­ 3% for insurance. This protects the financial
institution in case you can't pay.
Legal Fees
You require a lawyer to act on your behalf in the purchase.
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8. Closing or Adjustment Costs
Payable when the sale is closed. (the day of posession) These costs include
property taxes paid by vendor prior to closing. Also, there can be an interst
adjustment. If your possession date is the first of the month, but your first
payment date isn't until 10th, there are 10 days you would be expected to pay
interest.
Land Transfer Tax
A tax paid to the Manitoba Land Titles Office at the time your
property is registered. It is calculated using the following chart:
­ On the first $30 000 nil
­ On the next $60 000 0.5%
­ On the next $60 000 1.0%
­ On the remainder 1.5%
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9. Jewelry has purchased a home for $225 000. Calculate the amount of
land transfer tax she would pay on closing.
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10. Jewelry has purchased a home for $225 000. Calculate the
amount of land transfer tax she would pay on closing.
On the first $30 000 0.00
On the next $60 000 (0.005 X 60 000) 300.00
On the next $60 000 (0.01 X 60 000) 600.00
On the remaining amount
225 000 ­ 150 000 = 75 000
(0.015 X 75 000) 1125.00
Total 2025.00
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11. The property tax for Chad's house is $1689 per
year. You buy his house with a possession date
of August 1st. How much do you have to pay
Chad to reimburse him for his prepaid house
taxes?
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12. Moving Costs
New Home Costs
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13. Assignment 5
Do all of the 2 questions
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