Costs of Buying a Home
Buying a home is a milestone, whether it’s your first, third or fourth. In addition to the price of a home, there are some other costs you’ll incur. Some of these costs are one-time fixed payments, while others represent an ongoing monthly or yearly commitment. Not all costs apply to every sale or purchase. However, when you are aware of the following items you won’t be hit with any surprises on closing day.
- Inspection fee
An inspection performed by a professional inspector is a sound investment. For $300 – $500, you’ll receive a written report on areas that are structurally sound and those where repairs are required.
- Appraisal fee
When you apply for a mortgage, your lending institution will ask for an appraisal of the property. Budget approximately $300 -$ 500.
- Survey fee
When you purchase a resale home, you are also required to have a Real Property Report which assesses any changes to the home and property. Normally the vendor is required to provide this in which case it costs you, as the buyer nothing, but can be added to your costs if the vendor negotiates it in the sale of his home Budget around $400 – $600.
- Property insurance
Insurance on your home covers the replacement value (structure and contents). To protect their investment on their loan, financial institutions require this coverage. Allow for $800 – $1,300.
- Legal fees
A lawyer should review every real estate transaction. Fees are determined by the complexity of the issues involved. Shop around and ask for an estimate prior to hiring any lawyer.
- Mortgage loan insurance fee
Depending upon the down payment, some lending institutions require mortgage loan insurance. Budget between 0.5% – 3.5% of the total amount of the mortgage.
- Mortgage application fee
Some financial institutions charge a mortgage application fee to process your application. If your request for a mortgage is turned down, most will return the application fee to you. Each time you renew a mortgage some institutions also charge a fee.
- Land transfer tax
Most provinces levy a one-time tax based on a percentage of the purchase price of the property. Your professional real estate agent can advise you on which service provider would be the most cost efficient and give you the best service for your particular purchase situation.