Ryan Broos

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Ryan Broos, Remax Real Estate.

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Buying a Home: What Expenses to Expect
Budgeting for a new home can be tricky. Not only are there mortgage installments and the down payment to consider, but there are also a host of other—sometimes unexpected—expenses to add to the equation. The last thing you want is to be caught financially unprepared, blindsided by taxes and hidden costs on closing day.
These expenses vary: some of them are one-time costs, while others will take the form of monthly or yearly installments. Some may not even apply to your particular case. But it’s best to educate yourself about all the possibilities so that you will be prepared for any situation. Use the following list to determine which costs will apply to your situation prior to structuring your budget:

1. Purchase offer deposit.
Typically when you purchase a property, you have to put down some sort of a deposit to hold the home. In most cases, this deposit counts towards your total downpayment that you will be making at the bank. The amount of the deposit varies greatly anywhere from $1000- 10,000, sometimes even higher. Most sellers insist on at least $5000, and once you get over the $250,000 price of the home, odds are the seller will want $10,000. The size of the deposit is negotiable, but the Seller is going to want something substantial to secure the deal.

2. Inspection by a certified building inspector.
Don’t cheap out on this one. Yes your friend’s uncle knows ‘everything’ there is to know about homes and will do it for $100, but this is likely the most substantial investment of your life, don't screw it up. It should cost around $500 depending on the property, and you should confirm the inspectors has insurance, experience, and a good reputation.

3. Appraisal fee:
Your lending institution may request an appraisal of the property. The cost of this appraisal is typically your responsibility. Talk to your mortgage broker about the cost if any on this one.

4. 5% GST:
This fee applies to newly built homes only or existing homes that have recently undergone extensive renovations. Confirm with your lawyer or an accountant if this will apply to your purchase.

5. Legal 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. When you are calling around watch out for the words ‘plus disbursements.’ Some lawyers when asked their price will say something like “all in the cost should be around $1300,” others may say “cost is $800 plus disbursements.” What a lot of people don’t realize is the first lawyer included disbursements in his cost and the second lawyer may end up charging you a similar amount as disbursements can be hundreds of dollars. Like I said lawyer rates vary, ballpark you are looking $1000-1600 with disbursements, for a purchase.

6. Homeowner’s insurance:
Your home will serve as security against your loan for your financial institution. You will be required to buy insurance in an amount equal to or greater than the mortgage loan.

7. Property taxes:
This one catches a lot of people off guard. Depending on how the seller pays property taxes you may be required to pay taxes before you move in. If the seller is paying month to month, you can likely just jump onto that program. If the seller pays once a year, things are a little different. Property taxes are paid by June 30 for the current year. For example what this means is on June 30, 2017, a seller pays their property taxes for January- December 2017, the six months that have already passed and the next six months. So if you move into the home in October, the previous owner has already paid the taxes for Oct, Nov, and Dec, and you have to pay them back for those months. Your lawyer figures this all out as part of the final closing costs.

8. Moving expenses.
Hiring movers can cost a lot, hiring you friends can cost you pizza, beer and more dents in your walls, figure out what works best for you.

9. Service charges:
Any utilities you arrange for at your new home, such as cable or telephone, may come with an installation fee and are then followed by monthly fees.

10. Renovation of a new home:
In order to “make it their own,” many new homeowners like to paint or invest in other renovations before or upon moving into their new home. If this is your plan, budget accordingly.

13. Condo fees:
If you are moving to a new condominium, you will likely be charged a monthly condo fee which covers the costs of common area maintenance.

That should cover most things so be sure to have enough saved for the ones that apply to you. It might not even be bad to budget a little more, just to be safe. If you end up with extra money, well that is a situation a lot of people are happy to find themselves in!

Happy house hunting.

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