This is a collaborative post by Ellie Jo with home buying tips.
If you’re looking at buying a house, then one of the most important steps is to ensure that you have a cost complete budget. Of course, there are unexpected little expenses that can pop up along the way, and you can never truly nail down what a home’s price will be until you have a deal.
However, you can prepare for those costs as best as possible to make sure that your savings are ready and you know exactly what you will be paying. Here are the costs of buying a house that you need to know even before you start looking.
image source: https://www.pexels.com/photo/home-real-estate-106399
Costs Of Buying A Home
The deposit
Naturally, the biggest concern, and the biggest expense, is going to be the deposit associated with any home loan. How much this will can depend on a range of things. First of all, it depends on the overall cost of the home.
However, it also depends on your credit and which loans are applicable to you. If you have very bad credit, for instance, then the mortgage provider may ask that you pay a higher deposit. In most cases, it is recommended that you have at least 20% of the home’s total value ready as a deposit, but there are some home loans that can see you reduce that.
The inspection
To make sure that you know exactly what you are getting, then it’s recommended that you hire a home inspector to come out and take a look at the property on your behalf. The costs can vary but rarely go over $700.
You might be tempted to skip this step, but you could end up missing a major problem with the home that could either be a deal-breaker or could help you haggle its price down.
The appraisal
This is not always charged, as most lenders tend to waive it. However, your lender will appraise the value of the home you’re buying in order to lend you the right amount of money.
This appraisal is considered a service by some and, as such, might come with its own fee. To make sure you’re not getting stung with an appraisal fee, do your research and choose a mortgage provider that doesn’t charge them.
The land survey
Another service that can be charged by your mortgage lenders, but is sometimes waived. In this case, you’re paying for a survey of the property.
This is done to fully outline the boundaries of the property and to make sure there are no confusing property disputes down the line. If the last land survey was completed relatively recently, the lender might not find it necessary to carry out another one.
The land transfer
There are taxes associated with every house and condo purchase, with the money going directly to the province. The land transfer tax is one such tax, charged at around 0.5% to 2% of the total property’s value. These closing costs usually come after the deal is complete.
As such, it’s recommended you find out your local land transfer tax for the property you plan to buy and set it aside for the end.
The legal fees
Whenever you buy or sell a home, you are going to need a legal representative. These conveyancing lawyers, also known as real estate lawyers, handle the mortgage and home purchase contracts, making sure there are no barriers to you purchasing the property, and hold the money until the deal is complete.
It can cost up to a grand to hire a lawyer for the duration of a home purchase, but they are an essential part of the journey.
Additional taxes
It’s important to do a little additional research on the costs of buying a home, especially when it comes to the taxes that you might have to pay. For instance, in some provinces, you may have to pay what is called a harmonized sales tax.
This is effectively a sales tax that is added specifically to new homes. As such, much like the next cost, it’s not likely to apply to any homes that are resold.
The New Home Warranty
Like the harmonized sales tax, this is a cost you only have to consider if you’re buying a new home. Like all warranties, they are designed to protect your investment. Unlike insurance, however, they can see you get a complete return on the purchase price of the home if the warranty is fulfilled.
Furthermore, new home warranties are only mandatory in certain provinces, but they’re a one-time fee that’s worth considering even if not mandatory where you plan on living.
Do you need insurance?
There are some kinds of insurance that are going to be mandatory. Some of these are not made mandatory but are, in fact, made mandatory by your mortgage provider. Home insurance is one such option that’s not mandatory to own a home, but you’re not likely to get a mortgage provider to agree to lend you money without one.
Title insurance is required in some provinces, too, while mortgage default insurance might be required by mortgage providers on low deposit loans.
The costs of moving
Don’t forget that it comes money to move as well. Hiring a professional moving team, getting all the boxes and equipment that you need, or using a rental vehicle will all add to your budget. You don’t want to skimp too much or else the process can get a lot more stressful.
The costs of creating your new home
Lastly, don’t forget the costs of turning your new house into a home. Getting the decorative items you need, the furniture, the appliances, and paying for any locksmithing, gardening, and utility services should all be budgeted ahead of time.
The sooner you get your new home in the right state, the more comfortable you will be.
With a budget that is as cost-complete as possible, you can ensure that you’re fully prepared to buy a home. Don’t a deal go sour because you have to face a bill you didn’t prepare for.
