#HOMEBUYERTIPS Costs associated with buying a home
Thursday Feb 28th, 2019Share
Buying a home is a big investment – likely the largest one you will ever make. The cost to buy a home should be carefully considered to avoid the risk of financial difficulty in the future.
Since this decision has a large impact on your wallet, we want to take some time to explore the many costs associated with buying a home. Doing your homework and knowing the average cost of these services in your neighbourhood will help you choose a home within a realistic price range.
Deposit: Depending the price of a home, you will need to put a deposit on a home as a security measure to ensure you don’t lose it to another interested buyer. The amount of your deposit, will become part of your down payment once you have purchased the home.
Down Payment: In Canada, the minimum amount you need to put down on a home is 5%. While this is realistic for most first time home buyers, having a down payment of 20% or more will help buyers avoid paying Mortgage Loan Insurance.
Land Transfer Tax: When you buy a home, you are required to pay a land transfer tax to the province upon closing. Cost will vary depending on your municipality, the size of the land and other factors. *First time home buyers are eligable for a rebate on land transfer tax up to $4,000 (conditions apply)
Appraisal Fee: An appraisal will normally cost between $200 and $300 but can vary depending on your location. This will help prevent you from borrowing more than you need to, and will prevent lenders from giving you too much.
Home Inspection: A home inspection is a necessary step in your home buying process and will normally cost an average of $350 depending on the size, age, and condition of the home. This helps ensure there are no unexpected maintenance or home improvement costs upon purchasing the home.
Property Insurance: While property insurance is likely already something you have factored into your budget, it’s important to do your research and find a reasonable quote that will ensure you are covered should anything unexpected happen.
Mortgage Insurance: There is mortgage life insurance, which is designed to protect the repayment of a mortgage if anything were to happen to you. There is also mortgage loan insurance if your down payment is less than 20% of the total house cost. Premiums for this type of insurance range from 0.5% to 3% and increase if you are self employed.