Most people save for their down payment and then realize that they need more money then that to close the file. What are some of those cost associated with purchasing a home?
1. Deposit - when you put an offer to purchase on a home, the first expense may be the deposit to the listing agents brokerage. It varies from municipality to city to province. Reach out to your realtor for more information in you area.
2. Home Inspection - In some areas home purchases will sometime forgo the home inspection, because of bidding wars. This is not always the best approach because a Certified home inspector can save you $$$ by showing you problem areas and repair that may be needed in the near future. AVERAGE COST: $200 to $500 per inspection
3. Legal Fees - Once you have an accepted offer to purchase, you’ll need to hire a real estate lawyer to handle and file your transactions. This includes put not limited to; conducting a title search, registering your new property in your name, and making sure the downpayment, and land transfer tax go to the correct offices on time. AVERAGE COST: $1,500 and up, including both fee and disbursements for title search fees, couriers and administration. Cost does not include the Land Transfer tax.
4. Land Transfer Tax - Land transfer tax is by province so check with lawyer in your province to understand charge of land transfer tax when you purchase property. Calculation as a percentage of the purchase price of your home and is payable on closing. Some cities have additional fee know as Municipal Land Transfer Tax.
AVERAGE COST: Ontario’s land transfer tax ranges from 0.5% to 2%, depending on property value. First-time buyers in Ontario, B.C. and P.E.I. can apply for a rebate of up to $4000. Check your provincial government’s website for more information on available resources and rebates.
5. Title Insurance. Today, most lenders require title insurance to protect against losses in the event of a property ownership dispute. This is purchased through your lawyer/notary and costs $100 - $300
6. Default Mortgage Insurance - All high-ratio mortgages (where the borrower’s downpayment is less than 20% of the home’s purchase price) require mortgage default insurance from an insurer such as Genworth Canada, CMHC or Canada Guaranty. Lenders pay the insurance premium, and the cost is passed on to the homebuyer and normally added to the mortgage. Also there will be PST on the default insurance amount.
AVERAGE COST: The premium is dependent on the amount of down payment and will be included in your mortgage documents. 2020 premiums are from 2.80% - 4.00% for less then 20% mortgages. Other rate on a case by case bases.
7. Mortgage Protection Plan Insurance - Although this insurance is optional, protection your loved ones is not. 65% of Canadians would have trouble covering their living expenses, including the mortgage, if the primary wage earner were to expectantly die. By placing Insurance in place your protect your investment while helping secure your family's financial well-being in the event of death or disability.
COST is based on mortgage amount and age. Not all policies are the same, speak with your Mortgage Broker to understand the difference, they will help connect you with an individual that will be able to explain.
8. Other fees to consider
CONDO
a) Maintenance fee
b) Special assessments fees - if major repairs need to happen
c) Rent or Occupancy fee if you are moving into a new build and there are delays in construction or registration of new build. You can move in but technically not the owner and therefore subjected to occupancy fee or also known as "phantom rent" Be prepared for these three potential costs of owning a condo.
ADJUSTMENTS
If the seller prepaid property taxes or utilities, you’ll have to repay them the prorated amount.
AVERAGE COST: $400 to $700
10. MOVING COSTS
And don’t forget the big day!
AVERAGE COST: $1,500 to $5,000
11. HOME INSURANCE
To protect your nest and its contents.
AVERAGE COST: $1,000 to $2,000 per year.
HOUSE EXPENDITURES
UTILITY DEPOSIT such as hydro, gas or water.
COST will be a deposit to each company if you are not already an customer .
Approx $300.00 per service.
HOUSE UPGRADES all houses need to be maintained and you need to be prepared for new furnace, roof repair, air conditioning are just a few examples.
Note: speak to your Mortgage Broker amount options with some of lenders on Home Warranty programs.
HOME MAINTENANCE GEAR Never owned a home before, consider the following must haves, lawn mowing equipment, ladder, some tools for minor repairs.
All information is a guideline to help you with some of the cost associated with mortgage lending and to advise you that there is more to your mortgage then the payment and rate.
Photo by Glenn Carstens-Peters on Unsplash