Know all the costs of buying a home

Family moving in to their new home

You have saved up for your down payment, but are you financially prepared to purchase a home?

Before you start looking for your home, it’s important to remember that there are additional costs that you will incur once you buy. Here are a few  costs to keep in mind:

Closing costs

We suggest that people budget for an additional 2 per cent of the purchase price on top of your down payment to handle closing costs. Closing costs include land transfer tax, legal fees, property tax adjustment, and a 30-day interest adjustment.

Mortgage default insurance

If you do not have a 20 per cent down payment, you will also be required to get mortgage default insurance, the cost of which is dependent on your down payment and purchase price and can be well over ten thousand dollars. You can either pay this lump sum up front or add it to the amount you borrow for your mortgage, just be aware that that option will increase your monthly payment.

Purchase/moving costs

Other costs you may incur during the purchase process include one or more home inspections depending on how many homes you make offers on. Budgeting for a home inspection may actually save you money long-term, as a home inspector will thoroughly review the home and make you aware of any issues such as foundation, roof, plumbing, or electrical problems prior to your decision to make an offer. As well, be sure to plan for moving costs whether it’s for a professional company or food for friends and family. If you’re moving out for the first time there are also many one-time expenses to get your home set up, such as spices or household cleaners. Make it easy by checking out our list of things to buy for your home before you move in.

Ongoing costs

Aside from your mortgage payment there are regular costs associated with a house purchase including property taxes, house insurance, utilities and ongoing maintenance and repairs. It is important to understand what a typical payment cycle will look like and budget for unexpected expenses. It is also important not to over-extend yourself, as you may find yourself relying too much on credit if any changes or surprises occur.

Know what you can afford & get pre-approved

Before beginning your search for your new home, we recommend knowing what you can afford and getting pre-approved for a mortgage.

Know what you can afford in minutes by using our Mortgage Affordability Calculator.  This will not affect your credit score. By getting pre-approved for a mortgage, you will know what you can afford  and get information about what constitutes a down payment, and the closing costs you can expect.  Plus you will be able to buy your dream home right when you find it! 

Apply for a pre-approval and start searching for your dream home.