No matter how many times first time home buyers are told to consider closing costs, it’s very easy to stay focused on that one big number – your mortgage – and forget about all the other expenses that come with buying a home.
In addition to your down payment, here are some of the other costs that you will need to cover before you’ve even stepped through the front door of your new home:
Home inspection. Though not mandatory, a home inspection has become the norm before signing on the dotted line. The Canadian Mortgage and Housing Corporation (CMHC) recommends making a home inspection a condition of your Offer to Purchase. Expect to pay between $300-$600.
Appraisal fees. Again, it isn’t mandatory, but it is one sure-fire way to ensure that you're not paying too much for the home you choose. Expect to pay between $200-$400.
Land survey. Sometimes requested by the lender, a land survey is done to verify the property's boundaries, measurements and structures and identify any easements on your property. Before paying for one to be done, ask the seller to provide an updated survey, especially if there has been a new addition, deck or fence built close to the property line. Expect to pay $1,000-$2,000.
Land transfer tax. This one is a doozy. In Ontario it's a multi-tiered system: 0.5 per cent is charged on the first $55,000; 1 per cent is charged on $55,000 to $250,000, and 1.5 percent is charged on $250,000 to $400,000.
Harmonized Sales Tax. In Ontario, it's 13 per cent and is only paid on new homes. But it gets tacked on to lawyer’s fees, moving costs, home inspections and home staging.
Title Insurance. It protects you from any errors that may have been made in the public registry. Expect to pay about $300.
Legal fees. Your lawyer will examine the terms of the offer, complete a title search, deed, registration and mortgage papers. Expect to pay $1,500-$2,500.
Hook-up fees. These are service charges to get your utilities up and running. Expect to pay $150-$300.
Moving costs. Even if you do the job with the help of family and friends, you'll have to cover the cost of a rental truck. Expect to pay anywhere from $30-$60 per day, plus mileage.
There are also some ongoing costs to consider when buying a home (before you even start to think about utility bills!) These include:
Home insurance. It begins on the day the sale of your house closes and starts at about $100-plus per month.
Mortgage insurance. If you put down less than a 20 per cent deposit you will be required to pay for this type of insurance. Rates are charged at one per cent to 2.75 per cent of your total mortgage, according to the CMHC.
Property taxes. The annual amount is usually listed on the MLS ad. Divide it by 12 to figure out your monthly payments.