Oh great, now there's more costs?
When you buy a house, the actual purchase price of the home is only a part of the final cost of the transaction. There are a number of additional fees that come along with transaction that you should be prepared for – some of them amounting to additional thousands of dollars.
So, what are they going to be?
Some of your extra costs will be paid out early on in the purchasing process, and some are not due until possession. Once of your first expenses will be your deposit, which you will need at the time of offer. The deposit is normally in the $500-$10,000 range and it forms a part of your total down payment amount. The remaining down payment is payable to your lawyer sometime during the week prior to possession. For example if you’re putting $20,000 down, you could expect to pay a $5000 deposit when you make the offer, and to pay a further $15,000 to your lawyer close to possession.
- Home Inspection – no home purchase would be complete without a home inspection. This is technically not a mandatory expense, but the majority of REALTORS® would always recommend getting a home inspection before finalising the sale. Typical home inspections in Saskatoon are around $400.
- Registration of Title – this is the cost to register your title on the property with Saskatchewan Land titles, and it varies according to the home’s value. The rate is $2 per thousand of the purchase price, plus $20. So for example, on a $300,000 purchase, the cost to register your title would be $620. This is typically paid to your lawyer.
- Tax Adjustments – If the seller has already paid the property taxes for the full year, then you will be required to reimburse the seller the taxes for the portion of the year that you will have possession of the house. This is typically paid to your lawyer.
- CMHC Insurance Premium – if you are using a high ratio mortgage (one where you are putting up less than 20% of the purchase price as down payment), you will have to pay an insurance premium. This is calculated as a percentage of your purchase price, depending on how much down payment you have, that will be added to your principle mortgage amount.
- Home Insurance – you absolutely cannot take possession of your new house without home insurance. Depending on the value of your home, and how many extra bells and whistles you want your policy to have, a home insurance policy could cost you anything from $600 a year, to over a thousand or more.
- Real Property Report – formerly called a Surveyor’s Certificate, this verifies that the buildings on the property are all within bounds of the property line. Many sellers have a copy that your REALTOR® will ask for; if not, they can cost anywhere from $500-$800.
- Legal Fees – a real estate lawyer is essential, they ensure the property transfer is done thoroughly, with all the information on the new owners registered on the property. A lawyer typically charges anywhere from $900-$1200 for their services. Keep in mind, however, that the typical bill from your lawyer after a home purchase will be much higher than that because they are the ones that charge title transfer fees, tax adjustments, and other miscellaneous costs such as GST.
Most mortgage brokers will tell you to budget a total of for 1.5% of the purchase price for closing costs and incidentals. So again, on our example purchase of $300,000, this would mean you should have between $15,000 and $60,000 for your down payment, and an additional $4500 for closing costs.
Feeling overwhelmed? CMHC has a handy worksheet where you can keep track of all your home-buying costs.