ASSOCIATED COSTS

You will need to plan ahead to cover the costs of buying a home. The total cost of buying a home goes far beyond its price. It is recommended that you review the following list with a lawyer or a real estate agent to make sure that you know exactly when and how much you have to pay.

Below are the major upfront costs when purchasing your home:

  • Down payment:  A portion of the price of the home (usually between 5% and 25%) that you must pay before you can apply to a bank, trust or credit union for a loan (mortgage).
  • Deposit:  This is part of your down payment and must be paid when you make an Offer to Purchase. The cost varies depending on the area, but it may be up to 5% of the purchase price. If you wish to make a down payment of 5% and you give a deposit of 5%, then your down payment is considered to be made.
  • Mortgage: A loan that is usually repaid in monthly installments (usually over 5-25 years). You must repay both the amount you borrow (principal) plus the charge for borrowing the money (interest).
  • Mortgage Loan Insurance Premium: If yours is a high-ratio mortgage (less than 20% down payment), your lender may need mortgage loan insurance. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing
  • Home Inspection Fee: A home inspection is a report on the condition of the home and generally costs around $350 - $600, depending on the complexities of the inspection. For example, it may be more costly to inspect a large home or one where issues such as moisture problems, pyrite, radon gas or urea-formaldehyde are suspected.
  • Property taxes: Taxes you must pay to your municipal government that help finance local services such as police and fire protection, garbage and snow removal, road maintenance and public health.
  • Land Transfer Tax: You may have to pay this provincial or municipal charge upon closing in some provinces and territories. The cost is a percentage of the property’s purchase price and may vary. Check with your lawyer/notary to see what the current rates are.
  • Prepaid Property Taxes and/or Utility Bills: To reimburse the vendor for prepaid costs such as property taxes, filling the oil tank and so on.
  • Property Insurance: The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing your home and its contents. Property insurance must be in place on closing day.
  • Water Tests: If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. You can negotiate these costs with the vendor and list them in your Offer to Purchase.
  • Septic tank: If the house has a septic tank, it should be checked to make sure it is in good working order. You can negotiate the cost with the vendor and list it in your Offer to Purchase.
  • Legal Fees and Disbursements: Must be paid upon closing and cost a minimum of $500 (plus HST).Your lawyer/notary will also bill you direct costs to check on the legal status of your property.
  • Title Insurance. Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property
  • Condominium fees: Condominium owners usually pay a monthly fee for general building maintenance.
  • Status Certificate Fee: This applies if you are buying a condominium unit and could cost up to $100.
  • Appraisal Fee: An appraisal fee is approximately $300 - $500. You will pay more if a house is larger than average or is located in an area with no comparable properties.

ADDITIONAL COSTS:

  1. Appliances. Check to see what comes with the house, if anything.
  2. Gardening equipment.
  3. Snow-clearing equipment.
  4. Window treatments. Check to see what comes with the house.
  5. Decorating materials. Paint, wallpaper, flooring and tools for redecorating.
  6. Hand tools. You will need some basic hand tools for your new home.
  7. Dehumidifier. May be required to control moisture levels, especially in older homes.
  8. Moving Expenses.
  9. Renovations or Repairs.
  10. Service connection fees. Charged for utilities — telephone, gas, electricity, cable TV, satellite TV, Internet and so on. You may be asked to pay a deposit for some utilities.
  11. Condominium Fees. You may have to make the initial payment for these monthly fees.


Now that you are aware of the costs involved it's time for Step 3: Making Sure You Are Financially Set