Whether it is your first house or your fifth, buying a new home is an exhilarating experience! You are ready! You have saved your down payment, put aside some money for new furniture or appliances and still have something left for that Caribbean vacation. But are you prepared for the hidden costs of buying a home?
Beyond your mortgage and down payment there are upfront costs to consider when buying a home and ongoing expenses to allow for. The following is a brief recap of the most common expenses:
Upfront, one-time costs:
- Home inspection. $350 to $600+. It may be required by some institutional lenders and the Canadian Mortgage and Housing Corporation recommends including a home inspection clause as a condition of your Offer to Purchase.
- Appraisal fees. $300 to $500+. An independent appraisal estimates of the value of the property that you are purchasing. Your mortgage lender will require an appraisal be done on the property. Depending on the situation, this cost can be covered by the lending institution or by you.
- Land survey. A new survey can cost $1,000 to $2,000+. Ask the seller to provide an updated survey, especially if they have added a new addition, deck or fence.
- Land transfer tax. From 0.5 to two per cent. In Ontario it's a multi-tiered system: 0.5 per cent is paid on the first $55,000 and one per cent on the remaining.
- Harmonized Sales Tax. In Ontario it's 13 per cent and is payable only on new homes, not resale. Some services related to the purchase of your home are subject to the HST (legal fees, moving expenses, home inspections and home staging).
- Title Insurance. $300+. It protects you from any errors that may have been made in the public registry. This is usually payable to your lawyer and will be added to your legal bill.
- Legal fees. $500 to $1,200+ for the title search, deed, registration and mortgage papers.
- Utility reimbursements. If the previous owner paid for hydro, water and property taxes beyond the closing date, you will be required to reimburse them on closing.
- Moving costs. Whether you choose to handle the move yourself or hire professionals, you will need to cover the cost of labour and/or the rental truck and fuel.
Ongoing costs to factor into your monthly budget
- Property insurance. This insurance comes into effect on the day that you take possession of your new house and premiums start at about $100+ per month.
- Mortgage insurance. If you put down less than a 20 per cent deposit you will be required to pay for mortgage insurance. Rates are charged at one per cent to 2.75 per cent of your total mortgage, according to the CMHC.
- Property taxes. Divide the yearly taxes by 12 to calculate your monthly payments. Current taxes can usually be found on the MLS listing. Some mortgage providers will pre-collect the property taxes with your mortgage.
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