The recent hike in land transfer and mortgage registration fees in Alberta has stirred a lot of conversation. As a mortgage broker deeply involved in the Alberta real estate market, I’d like to explain how these changes may impact homebuyers and share my thoughts on navigating this shift.
Alberta Land Transfer Fee & Mortgage Registration Fee Increase. What Are the Changes?
Effective Oct 20th 2024, both land transfer fees and mortgage registration fees will increase.
Despite the increase Alberta had one of the lowest real estate transaction costs in Canada. However, these recent adjustments mean prospective buyers will now need to budget for additional upfront costs when purchasing a home.
Here’s a breakdown of the changes:
Land Transfer Fees: this fee is going from $2/$5,000 of the value for a land transfer to $5/$5,000. It's a 150% increase.
Mortgage Registration Fees: Applicable when registering a mortgage on a property, these fees have also seen a rise, going from $1.50/$5,000 to $5/$5,000. An increase of 233%.
But how do these increases translate into hard numbers?
Let's look at an example.
Home purchase price: $500,000
Down payment: $100,000
Mortgage amount: $400,000
Old Fee | New Fee | |
$500,000 Land Transfer | $50 + [$2 x ($500,000/$5000)] = $250 | $50 + [$5 x ($500,000/$5000)] = $550 |
$400,000 Mortgage | $50 + [$1.5 x ($400,000/$5000)] = $170 | $50 + [$5 x ($400,000/$5000)] = $450 |
The $50 is the base fee applicable to all transaction.
As you can see from the table above, for a purchase of $500K property with $400K mortgage, there is an increase of $580 in land transfer and mortgage registration fee.
Keep in mind that other fees associated with the closing of a real estate transaction such as legal fee, disbursement, property tax adjustment, etc. still applicable.
A Personal Take on These Changes
While this increase brings Alberta's real estate closing close higher, I think it's still very affordable when compared to other provinces such as Ontario and BC where high land transfer tax applies.
If you’re planning to buy, I recommend reaching out for a financial review before making any offers. Knowing the complete financial picture, including all fees and how they integrate into your mortgage, can help you approach the buying process with confidence.
How to Prepare
Include Fees in Your Budget: Work with a mortgage broker to ensure your budget considers all closing costs, including these increased fees.
Plan Your Down Payment Carefully: Adjust your down payment plan to cover added fees while keeping your mortgage manageable.
If you have questions regarding your specific situation, book a free, no-obligation initial consultation and I'll be more than happy to discuss your specific situation further.
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