Thinking of Buying a Home? Remember these Expenses to Expect

Budgeting for a new home can be tricky. Not only are there mortgage payments, house insurance payments and the minimum down payment to consider, but there are many other costs one has to be prepared for before closing day. You are going to want to be prepared accordingly. Use the following list to determine which costs will apply to your situation:

1. Purchase offer deposit: 

 Usually 5% of your total purchase price/ accepted offer. Depending on your current situation, down payment and mortgage approval this can be more. If you are looking to avoid paying suck mortgage insurance fees associated with CMHC, 20% is the required down payment. Also if you are looking to buy an investment property that is not your primary residence, 20% is required. REMEMBER….the deposit you give on your offer to purchase as the “initial deposit” counts towards your down payment.

2. Inspection by a Certified Building Inspector: 

Your realtor can refer a few inspectors to you. The charge for a home inspection is around $400-$600. This is VERY important and always recommended especially when purchasing a single family home like a detached home, ½ duplex, etc. Also you may want to be prepared for one or two inspections. This would be the case if the first home you inspected didn’t pass to your satisfaction so you continued onto to look and purchase a different property. Now you will need/want another inspection on the new property. Some inspectors offer a small discount on the immediate second inspection due to this nature. 

When purchasing a CONDO, the buyer doesn’t always necessarily need a building inspection as your realtor will write in the offer to purchase the standard subject to review of condo documentation clause. Some buyers prefer to have an inspection done of the unit regardless to ensure all electrical receptacles and switches are functioning properly. Appliances work, plumbing is sufficient with no leaks and clogs, as well as to take a visual of the unit and the exterior of the whole building, hallways, underground parking and etc. 

***Note to remember, I always recommend my buyers have financing approval before paying for an inspection. I personally only work with qualified buyers, but if for some reason your financing were to change or have a hiccup, then you are not out the $400-$600 inspection fee. No point on having an inspection on a home that you can’t purchase in the end. ***

3. Appraisal fee: 

 Your bank may request an appraisal of the property. This is normally $200-$300. This is to ensure that the financial institution lending money based on a true value of the property. What someone is willing to pay for a property is not always the appraised value. The banks don’t want to lend more than what it is worth. Sometimes you won’t hear about this fee as some mortgage brokers take care of this fee for you, while others will charge you for this service.

4. 5% GST: 

 This fee applies to newly built homes only, or existing homes that have recently undergone extensive renovations. However when purchasing from a builder you usually receive a new home GST Rebate, so you are not paying the full 5%. This is something to consider as it is thousands of dollars in tax alone.

5. Legal and Disbursement fees: 

A lawyer should be involved in every real estate transaction to review all paperwork. Experience and rates offered by lawyers range quite a bit, so shop around before you hire. Estimates rates can range from $1500-$2000. These are referred to as “closing costs”. Your realtor should be able to refer you to a few lawyers they have worked with and can recommend.

6. Hook Up and installation fees: 

 Any utilities you arrange for at your new home, such as Electricity, Natural Gas, Cable, Internet, Home Phone, Alarm Systems, etc may come with an installation fee. Best to negotiate a term or contract with whichever provider you prefer and gives you the best customer service. Shop around as some companies offer great incentives as new client’s vs some others.

7. Maintenance fees: 

 If you are moving to a condominium, you will likely be charged a monthly condo fee which covers various costs like Property Management, Reserve Funds, Maintenance and etc. Some condos include specific utilities while others don’t. Review the condo documents and be sure you are aware of all that the condo fees cover. Most apartment style condo fees include heat, water and garbage. You usually pay for your own electricity. But some condos have their own hot water tanks and furnaces so best to always be sure before moving forward. Also, some condos come with assigned parking which may be included in your condo fee or have an extra monthly charge.

8. Movers, Van Rentals: 

Not everyone has 4 strong men willing to move them for pizza and beer! So shop around and consider prices and your budget if hiring a moving company. Check references and ask your friends and realtor if they have any they recommend or highly suggest staying clear of.

These are just a few of the most common expenses to expect. The right Realtor and Mortgage Specialist will be able to coach you along the way and inform you of what to expect.