Hidden Home Expenses
ask an expert: buying a new homecanada
(Jun.15.10)
I'm preparing to buy my first home. What other costs I should budget for (on top of my down payment, mortgage and regular utility bills)?
Stephanie G. emailed us at expert@sweetspot.ca, and financial expert (and star of Til Debt Do Us Part) Gail Vaz-Oxlade answered:
Got your mortgage pre-approved and your mortgage payment budgeted? Haven't got a clue about the other costs involved in buying a home? Here are some things that should be on your list:
- Adjustment costs: You have to reimburse the seller for things like property taxes and utility bills. Your lawyer will figure out the total cost.
- Legal fees: Your lawyer will review the terms of the offer, deal with the mortgage, do a title search, register a new title and get the documents needed to calculate the adjustment costs. Cost: $1,500 - $2,500.
- Home inspection: The home inspection report should outline costs of repairs or replacements where needed, as well as comment on the condition of the property, which will speak to how well the home has been maintained. Cost: $300 - $500.
- Appraisal fee: Some lenders make you pay between $150 and $250 to have the property appraised. Some make you pay for a property survey, too. Cost: $1,000 - $2,000.
- Land Transfer Tax: Unless you live in Alberta, Saskatchewan, or rural Nova Scotia, you'll have to pay. Royal Lepage has a detailed list of these taxes and a calculator you may find useful.
- GST/HST: Buying a new home or one that's been extensively renovated? You'll have to pay GST/HST where applicable. Get your agent to calculate the taxes for you ahead of time so you know what to expect.
- Title insurance: Very big in the U.S, this is relatively new in Canada. Allocate $150 - $500, depending on the value of the home.
- Interest adjustment: If you close on July 17 for example, the interest adjustment date would be from July 17 to the day when your first full mortgage payment is due.
- Hook-up fees: Service charges apply when utilities are hooked up. Make sure you have a couple hundred dollars set aside for this.
- Home insurance: If you have a mortgage, your lender will insist that you have enough home insurance to cover the total amount of the mortgage. No mortgage? You can go with covering just the building(s).
Gail Vaz-Oxlade is one of Canada’s most successful and respected financial writers, and has written several bestselling books. She currently doles out her no-nonsense approach to money management as host of the television show Til Debt Do Us Part, which airs in 32 countries and reaches over 1 million Canadian viewers each week. You can buy her book here.
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