Don’t forget about these costs when buying a home
Buying a home is a milestone, whether it is your first, third or fourth.
In addition to the price of a home, there are some other costs you’ll
incur. Some of these costs are one-time fixed payments, while others represent
an ongoing monthly or yearly commitment. Not all costs apply to every sale
or purchase. However, when you are aware of the following items you won’t
be hit with any surprises on closing day.
An inspection performed by a professional inspector is a sound investment.
For $300 - $500, you’ll receive a written report on areas that are
structurally sound and those where repairs are required.
When you apply for a mortgage, your lending institution will ask for an
appraisal of the property. Budget approximately $300 -$ 500.
When you purchase a resale home, you are also required to complete a Real
Property Report, which assess any changes to the home and property. Budget
around $400 - $600 (Rural fees vary depending on size of land being surveyed).
Insurance on your home covers the replacement value (structure and contents).
To protect their investment on their loan, financial institutions require
this coverage. Allow for $500 - $1,000.
There will be an installation fee for utility services, including telephone,
water, electricity, gas,
and cable. Hook up fees range from $50.00 - $175.00 depending upon the
A lawyer should review every real estate transaction. Fees are determined
by the complexity of the issues involved. Shop around and ask for an estimate
prior to hiring any lawyer.
Mortgage loan insurance fee
Depending upon the down payment (can be payed infull upfront or into your
monthly mortgage payment), some lending institutions require mortgage loan
insurance. Budget between 0.5% - 2.75% of the total amount of the mortgage.
Mortgage application fee
Some financial institutions charge a mortgage application fee to process
your application. If your request for a mortgage is turned down, most
will return the application fee to you. Each year you renew a
mortgage some institutions also charge a fee.
Costs for professional movers range from $65.00 - $100/hour for a van
and two movers. Prices may be higher during peak moving times.
In some cases, the cost of local improvements made in your area (sewers,
sidewalks, alleys) could be added to your tax bill.
With the purchase price of a resale home, the closing is always “subject
to usual adjustments.”
This means that any amount that the seller has already prepaid will be adjusted
so that the home buyer pays the excess amount back to the seller and vice
versa. These adjustments can include:
municipal property and school taxes monthly condominium maintenance fees
first and last month's rental for rental properties that may be in the
home, utilities (such as hydro, water and fuel oil, including GST).
Interest adjustment costs
Most lenders expect the first mortgage payment one month after closing
the purchase - however, if you close mid-month, some lenders expect the
first payment at the beginning of the next month, two weeks before you
would normally expect. Or they charge a pro-rated interest to make up
Land transfer tax
Most provinces levy a one-time tax based on a percentage of the purchase
price of the property.