Real Estate Fees In New Brunswick: How Much?

Real estate fees in New Brunswick can vary, but the average commission rate is 5% and can range from 5% to 7%. These fees are paid by the seller, not the buyer, and are split between the buyer's and seller's agents. The commission is usually a percentage of the selling price, but some agents may charge a flat fee for lower-value homes. As real estate agents provide a service, you will have to pay tax on their commissions – in New Brunswick, the HST rate is 15%.

Real estate agent fees

Before signing a contract with a real estate agent, it is important to understand the fees involved. In New Brunswick, you should expect to pay a commission fee of around 5% to your agent. This fee is typically split between the buyer's agent and the seller's agent. As the buyer, you do not need to factor this fee into the deal, but it is important to be aware of it.

When choosing a real estate agent, it is essential to ask about their commission fee structure. Some agents may charge a flat fee, while others may charge a percentage of the sale price. It is also worth noting that real estate agents in New Brunswick must be licensed and follow a code of ethics. Be sure to ask for references and inquire about their experience and success rates.

In addition to the real estate agent's commission, there are other costs to consider when buying a home in New Brunswick. These include closing costs, such as legal fees, property taxes, and insurance. It is important to budget for these additional expenses when planning your home purchase.

Overall, when buying a home in New Brunswick, it is crucial to understand the fees involved and to choose a licensed and reputable real estate agent who will work in your best interest.

Lawyer fees

Legal Fees:

Legal fees for real estate transactions in New Brunswick typically range from $600 to $1,500, depending on the complexity of the transaction and the lawyer's experience. These fees cover the lawyer's time and expertise in handling the various aspects of the transaction, such as preparing and reviewing documents, conducting title searches, and coordinating the closing process.

Disbursements:

In addition to legal fees, there are also disbursement costs, which are expenses incurred by the lawyer during the real estate transaction. Disbursements can include costs such as title searches, government charges for registering documents, land transfer tax, registry computer access fees, courier charges, photocopies, and certificates. These disbursement fees can add a few hundred dollars to the overall legal costs.

Land Titles System:

New Brunswick has two systems for property registry: the older Registry system and the newer Land Titles system. If your property is on the older Registry system, you will typically incur higher disbursement fees to cover the cost of a title search and any related expenses. On the other hand, if your property is on the Land Titles system, a title search is not necessary, and the province will issue a Certificate of Registered Ownership at a lower cost.

Property Type:

The type of property being bought or sold can also impact lawyer fees. Residential, commercial, and industrial properties may have different associated legal fees due to varying levels of complexity and the number of documents involved.

Additional Services:

Lawyers may also provide additional services for a fee, such as preparing and reviewing mortgage documents or handling refinancing. These services are often necessary for a smooth and secure real estate transaction, so be sure to discuss them with your lawyer beforehand.

Shopping Around:

It is always a good idea to shop around and get quotes from multiple law firms. Fees can vary significantly, and by obtaining multiple quotes, you can ensure you are getting a competitive rate. Additionally, if you are paying in cash without a mortgage, you may be able to avoid certain fees, such as those for title insurance.

In conclusion, lawyer fees for real estate transactions in New Brunswick typically range from $600 to $1,500, with disbursement costs adding a few hundred dollars more. The specific fees will depend on the property type, the complexity of the transaction, and the lawyer's experience. It is essential to discuss all potential fees with your lawyer beforehand to avoid surprises and ensure a smooth process.

Closing costs

When buying a home in New Brunswick, there are a number of closing costs to be aware of. These cover any legal and administrative expenses incurred during the house-buying process and typically cost between 1.5% and 4% of the purchase price of the property.

Costs before closing your mortgage

• Home inspection fee: While not mandatory, it is recommended to get a home inspection to check for any problems with the property. This typically costs around $500.
• Deposit: You will need to put down a deposit when making an offer on a home, which is usually separate from your down payment.
• Land transfer tax: This cost varies by city and province but typically ranges from 0.1% to 2% of the property value.
• Title insurance: This insurance covers the homeowner in the case of a dispute over the land or home, costing around $100 to $300, depending on the lawyer's fees.
• Legal fees: You will need to pay for any documents prepared and sealed by a lawyer, as well as registration and filing fees. These costs can start at $500 and go up to $1,500 or more.
• Land survey fee: Some lenders will require a land survey to determine the borders of your land, costing between $1,000 and $2,000. However, you may be able to use the previous owner's land survey.
• Mortgage application fee: Some lenders will charge a fee for applying for a mortgage, and some brokers may also charge a fee for helping you find a lender.
• Appraisal fee: Your mortgage lender will estimate the value of your property, usually costing between $250 and $400. This fee may be covered by your lender.
• Estoppel Certificate Fee: If you are buying a condo or similar unit, you will need to pay a one-time fee of around $100 for an information package regarding rules and information about your specific condo building.
• PST on mortgage insurance: If you put down a deposit of less than 20%, you will have to pay mortgage insurance, which is usually added to your monthly mortgage payments. However, the PST must be paid in full and in cash at the time of closing.
• Water tank and septic tests: If your home has a well or a septic tank, you will need to pay for water and septic tests to ensure they are functioning correctly. You may be able to negotiate with the seller to cover these costs.

Costs factored into your mortgage

• Mortgage insurance: If your down payment is less than 20% of the purchase price, you will need to pay mortgage insurance, which can be added to your monthly payments or paid as a lump sum. The interest rate for this insurance varies depending on the size of the down payment.
• Interest: The amount of interest you pay on your principal balance depends on the interest rate, the loan term, the amortization period, and whether you choose a fixed or variable interest rate.

In addition to closing costs, there are other expenses to consider when budgeting for a new home:

• Monthly mortgage payments: You will need to budget for your monthly mortgage payments, which include paying towards the principal balance and the interest.
• Property taxes: Property tax is calculated as a percentage of your home's value and can range from 0.5% to 1.25%, depending on the municipality and province or territory. You can pay this in a lump sum or in monthly payments.
• Property insurance: This covers the cost of any damages to your home or its contents, and premiums are usually paid monthly or annually. The cost varies depending on the provider, the size and type of your home, and the contents insured.
• Utility bills: You will need to pay for heat, hydro, gas, water, cable, internet, and phone bills. Any prepaid bills, including property tax, that have been paid for the year by the previous owner will need to be reimbursed.
• Condo fees: If you are buying a condo, you will likely need to pay a monthly condo fee that covers maintenance, garbage disposal, and sometimes utilities.
• GST/HST on new builds: If you are buying a new home, you will need to pay GST/HST, which varies by province. Builders usually include this tax in the total cost of the property.

Mortgage insurance

In New Brunswick, Canada, mortgage insurance or CMHC insurance is mandatory for homes with down payments lower than 20%. This insurance protects lenders in the event of a default by the home buyer. Thanks to this protection, lenders can offer lower mortgage rates for mortgages with lower down payments.

CMHC insurance rates and regulations in New Brunswick are the same across Canada. Insurance rates vary from 2.80% to 4.00% depending on your down payment and your income. The calculated CMHC insurance premium is added to your mortgage amount and is paid off in your monthly mortgage payments over your mortgage's amortization period.

Let's say you have bought a $300,000 home with a $40,000 down payment and an amortization period of 25 years. Your insurance premium would be calculated as follows:

• $40,000 (down payment) ÷ $300,000 (home price) = 13.33% (down payment percentage)
• $300,000 (home price) - $40,000 (down payment) = $260,000 (mortgage before CMHC)
• $260,000 (mortgage before CMHC) × 3.10% (CMHC tax rate) = $8,060 (CMHC insurance premium)
• $260,000 (mortgage before CMHC) + $8,060 (CMHC insurance premium) = $268,060 (total mortgage)

You will pay the insurance premium of $8,060 in your monthly payments.

There are additional federal regulations regarding CMHC insurance:

• Homes purchased for more than $1 million are not eligible for CMHC insurance, therefore homeowners must put more than 20% down.
• The maximum amortization period on CMHC-insured mortgages is 25 years.
• Homes sold for over $500,000 can no longer be purchased with a 5% down payment. The new minimum down payment is 5% of the first $500,000, and 10% of any amount over $500,000.

In addition to CMHC insurance, there is also mortgage protection insurance or creditor insurance. This type of insurance is required by lenders as a condition of the loan and covers the borrower's outstanding loan balance in the case of their death. You are not required to purchase this insurance from your lender and can shop around for the best product for your needs.

Property taxes

Property tax is an important aspect of owning a home in New Brunswick. It is calculated as a percentage of your home's value and can range from 0.5% to 1.25%, depending on the municipality and province or territory your home is located in. This means that for a home valued at $300,000, the property tax could be anywhere between $1,500 and $3,750 annually. It is essential to consider this recurring expense when budgeting for homeownership.

When purchasing a home, it is common for the seller to have already paid property taxes for part of the year. In such cases, the buyer is responsible for reimbursing the seller for the prepaid taxes upon closing the sale. This reimbursement ensures that the seller only pays for the portion of the year that they occupied the home, and the buyer pays for the remaining period.

When considering purchasing a home in a particular area, it is advisable to research the local property tax rates and the services provided by the municipality. Additionally, understanding the market conditions, such as whether it is a buyer's or seller's market, can help you make an informed decision about the timing of your purchase.

In summary, property taxes are a significant consideration when buying real estate in New Brunswick. By understanding the applicable tax rates and the breakdown of expenses between the buyer and seller, you can effectively plan and budget for this ongoing cost of homeownership.

Frequently asked questions