Congratulations on being approved for your dream home and securing an ideal mortgage! As you prepare to make this momentous commitment,many overlook a critical aspect: the hidden costs of homeownership. These unexpected expenses can surprise new homeowners, and our goal is to ensure you're not caught off guard.
Let's ensure your journey into homeownership is as smooth and transparent as possible!
Land Transfer Tax
Purchasing a home in Canada involves paying a land transfer tax, an expense that varies depending on the province and, in some cases, the municipality.
A notable example is Toronto, where buyers face an additional municipal tax in addition to the Ontario land transfer tax.
This fee is determined as a percentage of your property's purchase price, meaning the higher the property value, the greater the tax you'll need to pay.
Home Inspection and Appraisal Fees
It's essential to have a professional home inspection before finalizing your home purchase. While this service might cost between $300 and $500, it's a worthwhile investment that can potentially save you thousands down the line by identifying any hidden problems with the property.
Moreover, most lenders will ask for a property appraisal, which usually falls within a similar price range, to assess the home's value.
Closing Costs
Closing costs cover various expenses such as legal fees, title insurance, and administrative charges. Typically, these costs amount to between 1.5% and 4% of the total purchase price of the home.
It's vital to allocate funds for these fees, as they become payable at the time your new home is officially registered in your name.
Property Taxes
Property taxes, which are calculated annually based on the assessed value of your home, constitute a major expense in Canada.
These taxes contribute to local amenities such as waste collection, road upkeep, and public education.
The rates for property taxes differ depending on your location and can fluctuate, making it essential to stay informed about the current tax rates specific to your area.
Utility Costs
Utility costs often surpass initial expectations, particularly in larger residences or older structures that lack energy efficiency. This category includes not just the basics like electricity, heating, and water, but also, in some cases, gas expenses.
In larger homes, the sheer volume of space can lead to higher consumption of heating and cooling energy.
Similarly, older buildings might not have the latest energy-saving technologies or insulation, resulting in increased energy usage.
Sign Confidently with Arise Mortgage
Budgeting for a home involves more than just saving for a down payment and qualifying for a mortgage. It's crucial to consider these hidden costs to avoid financial strain and ensure a smooth transition to homeownership.
At Arise Mortgage, we place a heavy emphasis on transparency. Together, our team will help you to understand each cost associated with your home and mortgage, so that you feel confident signing on the dotted line.