You may think you have saved up the appropriate amount of money to purchase a home, but the down payment isn’t the only cost you should be prepared to pay.
I like my Buyers to be completely prepared when they purchase a home so here is a list of things to consider:
- Interest Adjustments: If there is a gap in time between your closing date and your first mortgage payment, there will be an adjustment to pay. This can be avoided by lining up the closing date and the first mortgage payment to be exactly one month apart.
- Bridge Loan: If you are selling one home and buying another, and there is a gap between closing dates, you may need to get a “bridge loan” to cover the gap and there will be interest to pay on this amount.
- Mortgage Insurance: This is often required by lenders if your down payment is 20% or less. It may also be something you simply choose to have.
- Inspections: When buying a home – even a new one – it is always wise to have a home inspection, a septic inspection, a well inspection – whatever fits the circumstances. An average home inspection is approximately $400 or so. Your agent will have some preferred inspectors to tell you about.
- Survey: If there isn’t a current survey available, you may have to have one done to satisfy your lender or insurer and this can cost anywhere from $750 to $1,500.
- Legal Costs: This varies – and costs will also depend on whether you are only buying or selling and buying. The cost can be as little as $750 or as much as $2500. Check with your real estate lawyer.
- Property Appraisal: Your mortgage lender may require an appraisal of the house you are buying – to ensure that it is worth what you are borrowing. This cost could be included in your mortgage package – but if not, it can cost anywhere from $150 to $350.
- Vendor Reimbursements: This will appear as part of your closing costs – you will have to reimburse the previous owner for any pre-payments on property taxes, fuel, hydro, etc.
- Land Transfer Tax: For a basic idea of how much this will be, use the following calculator:
- Home Insurance: Make sure you have spoken with several insurance agencies to get the best price and coverage for your home insurance – and keep this in mind when calculating your monthly costs.
- Condominium Fees: If you are purchasing a condo, make sure you fully understand what the condo fees are and what is included in them. There could be other hidden costs such as tax on appliances, occupancy fees, warranty enrolment fees, etc.
- Moving Costs: You have finally calculated all of the costs and the purchase has become a reality. Now you need to move!! Make sure you talk to several local or long distance movers to get the best deal and service to meet your needs.
- Property Taxes: Your mortgage lender may have calculated these into your monthly mortgage payments, but make sure you understand what your property taxes will do to your monthly payments. The City of Ottawa website has a property tax calculator you can use to get a good estimate. You can find this at ottawa.ca/cgi-bin/tax/tax.pl?lang=en
- Utilities: The final cost you should plan for is utilities. If you have been renting, these may have been included in your rent. Now that you own, you will be responsible for these above and beyond your mortgage payments – heat, hydro, water/sewer and, of course, the usual things such as internet, phone, satellite/cable – it all adds up.