The Hidden Costs Of Buying A Home That Every Homebuyer Should Know About

Purchasing a home is a major purchase, and what many home buyers, especially new ones don’t realize is that there are a number of hidden costs associated with the home purchase. So when you look at purchasing a home, you must make sure that you have a good understanding of how much money you will need to spend.

Here is a list of costs that are typically associated with buying a home:

Appraisal fee: Required by the lender to ensure that you not trying to borrow more than you should be relative to the property’s actual value. Sometimes your lender may cover this cost.

Property purchase tax: This is land transfer tax that is calculated as a percentage of the purchase price. The formula varies for province to province and from city to city. If you are a first time buyer you receive some exemption.

Adjustment costs: These are prepaid costs paid by the vendor that are to be paid back  when the buyer takes possession of the home. Typical costs are property taxes, utility bills such as gas, hydro and water.

Home inspection fees: A home inspection reports on the condition of the home – the electrical, plumbing, roofing and insulation aspects, and includes the condition of the structural health of the home.

Property survey: Some lenders require a property survey to verify the property’s boundaries, measurements, and structures and identify any easements, rights of way or encroachments on your property.

Interest adjustment: This is the calculation of interest from the closing date to the date of the first mortgage payment is calculated. For instance, if you close your deal on March 10th, the interest adjustment date would be from March 10th to April 1st, the day when your first full mortgage payment is due.

Hook-up fees: Fees charged by utility companies and telephone companies to create an account and initiate the service.

Strata or condo fees: If you are buying a condominium or townhouse you may be charged a monthly fee to cover the costs of security, lighting and common area maintenance.

Legal fees: There are a number of legal documents that can only be processed by a lawyer or notary public. On top of these fees, you will be charged on disbursement costs such as photocopies, telephones, mail and other costs of doing business.

New locks: It is usually advisable to change the locks of your new home once you have moved in. The previous owners may have given the keys to a number of individuals, some who many not be aware of the sale.

Insurance: Most lenders require homeowners to buy home, fire and liability insurance, effective on the completion date of the sale.

Mortgage insurance: If your down payment is less than 20% of your total mortgage, you will be required by the lender to get mortgage insurance, which protects the lender if you default on paying the outstanding loan.

It is important that you factor in these costs when contemplating a home purchase. You should also keep funds available for any repairs or renovations that may be required on possession.

If you are looking to buy a home, we have over 45 homes available and over 28 years of experience in the real estate business. Contact us via email or call us on 604 913 1000 or 604 695 1000.

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