Other costs to be aware of when you buy

This is a list of possible extra costs involved in buying a home. Some of them are one-time costs and others, such as condominium maintenance fees and property insurance, will be ongoing monthly expenses. The good news is that not all of these costs may apply in your circumstances.

Don’t forget the tax- The 7% GST applies to new housing. However, there is a rebate, to a maximum of 2.5%, if your home costs less than $450,000. There is no GST on resale housing unless the home has been substantially renovated, and then the tax is applied as if it were a new home.

Property taxes Taxes are always a certainty. If you have a high-ratio mortgage, your lender may require that you have your property tax installments added to your mortgage payments.

Survey fee- Your lender will require an up-to-date survey. Ask the vendor to provide one as a condition of your Offer to Purchase, or you will have to pay to have one done.

Property insurance- This insurance covers the replacement value of the structure of your home and its contents. Your lender will insist on this because your home is the security for your mortgage.

Prepaid taxes or utility bills- You will have to reimburse the vendor on a prorated basis if some bills have been prepaid beyond the closing date.

Land transfer tax- This applies in most provinces. It varies as a percentage of the property’s purchase price. It is usually about 1%-4%.

Service charges- You’ll be charged a fee to hook up new services and utilities, such as your telephone, at your new home.

Lawyer (notary) fees- Even a straightforward home purchase requires a lawyer to review the Offer to Purchase, search the title, draw up mortgage documents and tend to the closing details. Lawyers’ fees for a mortgage range widely depending on the complexity of the deal but will probably be at least $500.

Mortgage loan- insurance premium and application fee If you have a high-ratio mortgage, your lender will require mortgage loan insurance provided by CMHC or a private company. The insurance will cost between 0.5% and 3.75% of the amount of the total mortgage (additional charges may apply) and can be included in the mortgage. The application fee will range from $75 to $235 depending upon how the lender processes your application. (consult your local lender for further details)

Mortgage broker’s fee- A broker may charge a fee to find you a lender, usually around 2% of the total mortgage. In many cases, however, brokers are paid by the lenders.

Moving costs- The cost of a professional moving company or a rental truck if you move yourself. Fees for a professional mover can range from $50-$100 an hour for a van and three movers. These costs may be 10%-20% higher at the end of the month and in the summer.

Estoppel certificate- A certificate that outlines a condominium corporation’s financial and legal state. The certificate and supporting documents will cost you up to $50. (Does not apply in Quebec.)

Condominium fees- Condominiums charge monthly fees for common-area maintenance, such as grounds keeping and carpet cleaning. Fees range widely depending on the type of structure but will probably be at least a few hundred dollars.

Home inspection fee- Inspectors are unregulated in many provinces, so fees range widely, from about $150- $350 for a home priced under $300,000. Larger, more expensive homes cost more to inspect. A two-hour inspection carried out by an engineer who provides a written report will cost closer to the upper limit. Municipalities can also supply any available inspection reports on the property for a fee.

Renovation and repairs- A home inspection may indicate that the home needs major structural repairs such as a new roof. Don’t forget to factor these costs into the price of the home.

Water quantity and quality certification- If you’re buying a home with well service, you’ll have to pay a fee from $50-$100 to certify the quantity and quality of the water.

Now that you know your affordable price range, these worksheets will help you evaluate the total cost of your new home.

Since purchase prices affect other costs as well, use these worksheets to help you establish the exact cost of differently priced homes in your price range. This calculation includes closing costs. Some can be included in your mortgage loan. Most come out of your pocket.

Click here to get Exact Cost Form (PDF)

To read the (PDF) Adobe Acrobat file, you will need the free Adobe Reader available from Adobe Systems Incorporated.

Calculate the impact your monthly expenses will have on the maximum house price you should be considering.

Remember, it’s only human nature to downplay how much things cost — but resist the impulse.

Be realistic.

Because if the final figure is underestimated, you could find yourself in a financial bind once house payments start up.

Make sure you don’t leave yourself house poor. It’s important to structure your monthly expenses so that you can still afford simple luxuries, like the occasional vacation.

 

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