The true cost of buying a home

There are more costs to buying a property than just the list price. It’s worth knowing about them so you don’t stretch your budget beyond your means.

Before buying: checks, balances and paperwork

The average person needs a bank loan to buy a house. That’s why it’s important to shop around various financial institutions and take the time to negotiate the posted mortgage rate. A visit to your bank representative to request a reduced rate will often do the trick. The other key question is whether to choose a fixed or a variable rate. That depends on your tolerance for fluctuating interest rates.

Before making your purchase, ask a professional to conduct a home inspection to detect any hidden defects. It will cost between $300 and $600 and include a detailed report.  Before you make an offer, your lender will order a financial assessment of your home. The bank will cover the cost (a little over $200), so be sure to have one done as soon as possible.

That’s not all: you also need a Certificate of Location, which can cost over $1,000. If your down payment is less than 25% of the purchase price, the loan must be insured by the CMHC. The lower your contribution, the higher the insurance premium; see the detailed calculation here.  Remember: This premium is subject to QST, payable to the notary.

Note: If you buy a new home, it is subject to both GST and PST sales tax, but you may receive a partial reimbursement if you paid less than $450,000 for your home. See Revenu Canada for the terms and conditions. Finally, the financial institution will offer you mortgage life insurance to protect your family in the event of your inability to pay. The good news is that you may already be covered if your employer provides group insurance benefits.

Signing: take note of the notary

Budget $600 to $1,200 for notary fees, which include the costs of the title search and preparing the loan contract. Since notary fees can vary greatly, be sure to compare rates for three before choosing the one you want to work with.

You must provide the notary with the proof of home insurance, required by your financial institution. The premium can cost between $200 and $1,500 a year, depending on the type of coverage you choose.

The notary will also calculate the municipal and school taxes the seller has already paid and the amount you must reimburse (the seller or the contractor). The amount will fluctuate, depending on the time of year. Making the move: small costs can make a big difference

Moving costs depend on the time of year, the amount of furniture, the distance moved… and the number of friends who volunteer to help!

Don’t forget to add in connection fees for electricity, cable and telephone. Some providers charge more than others. One last thing… make sure everyone knows where to find your new home with the Canada Post Mail Forwarding Service. See the rates here.

Last, but certainly not least.

Once you’ve started to make yourself at home, you might think that your house-spending spree is over. Not so soon! Within two to six months of your new purchase, you’ll get hit with the infamous Welcome Tax, or land transfer tax.

To calculate the amount, take 0.5% of the first $50,000 of the purchase price of your new home, then 1% of the next $50,000 up to $250,000, then 1.5% of any remaining value. . It’s your new municipality’s way of rolling out the welcome mat!