The booming real estate market can be enticing so it is common to catch yourself thinking whether or not to take advantage of it. Buying a home is probably the largest investment you will ever make, so here are few tips to help your planning process. Doing your homework can minimize the risk of any future financial downfalls.
Here is a list of costs (hurdles) on your journey to getting your dream home.
- Deposit: This is a standard cost. As mentioned earlier, you aren’t the only one considering to take advantage of the real estate boom so in order to ensure you don’t miss out on your dream home – pay a deposit. This security measure will also contribute to your down payment once you purchase the home.
- Down Payment: In Canada, the minimum amount is 5% of the purchase price. However, for first time home buyers, it is recommended to pay at least 20% of the amount before applying for a loan (mortgage) from a financial institution to avoid paying Mortgage Loan Insurance.
- Home Inspection: This short term cost can help save you hundreds or sometimes thousands of dollars in the future labelled as hidden/unexpected maintenance costs. This saves you the surprise and should be an essential step in your home buying process.
- Moving expenses: This is not limited to just furniture but also cost for moving your utilities like cable line, phone line, electricity etc…
- Condominium fees – Condo owners usually pay a general monthly fee for building maintenance
- Insurance costs: This includes costs like property and mortgage insurance. It is important to factor this into your budget to ensure you are covered should anything unexpected were to happen to you or the property.
- Land Transfer Tax: “Land transfer tax is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land.” (Ontario Finance, 2016)
- Maintenance cost: This is a vague term for turning the house into your home. This could be any additions/upgrades, renovations or cost of keeping the house running year-round.
- Fees such as realtors or lawyers
- Property Appraisal Fees