It is important when you decide to buy a home that you have a full understanding of the costs associated with your purchase. People often assume the only cost of buying a home in our real estate market is the price of the home, and that is it.
In reality, there are a lot of additional costs that you must be prepared for when buying a home, and it is important that you are fully aware of them. You will need to have some additional money set aside to cover these costs unless you have already made arrangements with your bank to cover these costs and absorb them into your mortgage.
Your largest initial expense will be your deposit. As a first time buyer (or even a repeat buyer) this should generally be approximately 5% of the purchase price; however, it will be up to the seller to determine how much they want in order to feel confident that you won’t walk away from the deal without your deposit if you need to. You should also be prepared to pay:
- Legal fees and disbursements
- Property transfer or land transfer tax
- Adjustments (payable to the vendor, such as taxes)
- Bridge Financing (if you need to carry two mortgages for some time)
- Home inspection fees or any other ancillary service fees requested by you as the buyer (furnace inspection, appraisal fee, water quality/quantity tests for acreages)
- Mortgage loan insurance premium (if less than 25% down) plus application fee (CMHC, Genworth, etc.)
- Moving expenses
Additionally, once you have purchased your home you will incur regular expenses on a monthly, quarterly, or yearly basis such as:
- Mortgage payments (you can do these weekly, bi-weekly, or monthly)
- Water/sewer/garbage/recycling payments
- Electricity and gas
- Cable/telephone/internet services
- Property taxes
- Condo fees, HOA fees and/or community fees
- Repair/maintenance expenses
- Property/Condominium Insurance
Don’t let this list of additional expenses worry you about buying a new home. All of these costs are part of purchasing a home and are well worth it. If you are interested in buying real estate, be sure to contact me. When working with you, I will sit down and go over a detailed list of expenses you will incur when buying a home. There are different expenses depending on the type of home you purchase. I can also put you in contact with many different vendors throughout the city that will be able to provide you competitive pricing on many of the associated costs. Be sure to contact me if you are looking to buy in the local real estate market.