The process of becoming a homeowner can be an exciting one. Beyond the purchase price of your potential new home, there are a host of other costs you’ll have to consider when you’re finally ready to take the plunge into home ownership.
The list of things you’ll have to spend money on may seem daunting but being prepared and informed will go a long way to helping you to come out on top at the end of the whole experience. Here are 8 extra costs to consider saving for ahead of time along with your down payment.
Home inspection fees
A home inspector evaluates and provides a report on their findings. The report will include an evaluation of the condition of the property relative to other properties of the same age and the overall maintenance. Home inspections are not mandatory, but are highly recommended. In Ontario you can expect to pay about $500.
You’ll need a lawyer to deal with a variety of things pertaining to the purchase of your home. This includes a title search, registering the mortgage and drawing up a new title. You’ll also want to discuss your offer to purchase with a lawyer before signing anything. Costs will vary by lawyer and their billable hours throughout the process. On average costs are between $1,300 to $2,500.
Land transfer taxes
Land transfer taxes are charged when a property changes hands and is the responsibility of the purchaser. The amount to be paid varies based on the purchasing price of the home. As a first time homebuyer, you may be eligible for a refund of all or a portion of the land transfer tax. Current Ontario transfer tax rates can be found here.
A property survey evaluates the boundaries and measurements of the the land you’re purchasing, and the position of any major structures. If you’re purchasing a resale your mortgage lender may ask for an updated property survey in order to approve your mortgage.
If there’s a gap between the closing date of your new home and your first mortgage payment, you’ll have to pay an interest adjustment which can range anywhere from $100 to $1000. You can avoid this expense by arranging to make your first mortgage payment one payment period after the closing date of your home.
Prepaid utility and property tax adjustments
If the person selling you the home has already prepaid property taxes and utility bills, you’ll have to pay them for these costs. The amount to be paid is calculated based on the closing date of the house. If you’re purchasing a new home some of these costs won’t apply but you will have to pay initial setup fees for your own utilities.
If you’re purchasing a resale home you won’t have to worry about taxes, but for new homes you’ll have to pay HST. This isn’t generally included in the list price, so you can expect an added after the fact. On the plus side, Ontario offers a rebate that may cover all or part of this expense based on price of your home. More information on the rebate can be found here.
If you’re purchasing an older home, chances are something will eventually leak, break or stop working. It’s always a good idea to set aside some money right away for when that time comes. If you’re buying a new home, you’re not in the clear. Things may not break, but you’ll likely need to spend money laying down new sod, paying for landscaping or putting up a new fence. It’s never a bad idea to have a small reserve on hand for maintenance.
In addition to the above costs, don’t forget to consider general expenses like moving, appliance upgrades, purchasing home maintenance equipment, decor and furniture.