Buying a Home? Don’t Forget About These Additional Costs
Wednesday Jun 29th, 2016Share
Buying a home comes with a big price tag – it’s probably the most expensive purchase that you will ever make and it’s also your biggest investment. Aside from the initial purchase price of your new home, there are additional costs that you will incur.
Here’s a list of other possible expenses that you’ll need to save for when buying real estate in Ontario:
Mortgage Loan Insurance
If you are putting less than 20% of the house value down, you're likely going to need mortgage loan insurance. Depending on the lender, a premium may be added to your monthly mortgage payments.
Lenders typically loan a percentage of a home's purchase price or the market appraisal of the property. The cost largely depends on the size and complexity of the assignment.
Your lender may ask for a current survey or certificate of the location before signing off on the loan. If so, you can expect to pay a substantial cost for having a new survey done on the property.
A deposit normally goes with the formal offer to purchase and the amount will largely depend on where the home is located.
Your lender will also require proof of property insurance for the replacement value of the house and its contents from the day you take ownership.
This type of insurance provides coverage in case of problems with the property title, amongst other things. The cost is relatively low at a few hundred dollars.
Some lenders will require you to pay the cost to process your application. These fees vary and some lenders will waive them entirely, if you have other accounts with them.
Mortgage Broker's Fee
If you use a mortgage broker, a fee may be charged to arrange the mortgage on your behalf.
Home Inspection Fee
A home inspection is a wise investment since it protects buyers by revealing any problems with the property before you commit to purchase it.
Legal fees vary by province and are subject to GST or HST where applicable. Ensure your lawyer's quote includes all related expenses and disbursements, not just legal fees. Make sure your interests are protected by discussing your Offer to Purchase with your lawyer or notary prior to signing.
Land Transfer Tax
Land transfer tax (LTT) is charged whenever a property changes hands and the amount is based on the purchase price. Most provinces in Canada charge a provincial land transfer tax and some cities also charge an additional municipal land transfer tax. In some cases, first-time homebuyers may be exempt from a portion of this cost.
Goods and Services Tax
Resale (used) homes are exempt from GST, but it does apply to newly constructed homes and may qualify for a partial rebate depending on the sales price and if the home is going to be your primary place of residence.
Buying a home can come with a number of other costs and fees, like moving costs, cleaning fees, charges for service hook-ups, property tax adjustments, ongoing maintenance (condo fees, etc.) and utility costs. It’s best to plan for these in advance so you aren’t strapped on moving day.
Want to learn more? Let's chat! As an experienced real estate sales representative serving Mississauga and the Greater Toronto Area, I’ve had the pleasure of helping hundreds of buyers find their next homes. Together, we can navigate the competitive real estate market to find you a home that you will not only love, but can afford.