What does it cost to buy a house?
Many people who buy a house for the first time do so for emotional reasons - they want a garden or don't want to ask the landlord for repairs anymore. There are financial attractions too: a house is an asset that can grow in value over time, and the rent won't keep going up.
The decision to rent or buy, however, is really a question of what you can afford. These are some costs of buying a home:
- Down payment - A portion of the price of the home (usually between 5% and 25%) that you must pay before you can apply to a bank, trust or credit union for a loan (mortgage).
- Mortgage - A loan that is usually repaid in monthly instalments over 5-25 years. You must repay both the amount you borrow (principal) plus the charge for borrowing the money (interest).
- Property taxes - Taxes you must pay to your municipal government that help finance local services such as police and fire protection, garbage and snow removal, road maintenance and public health. All property in Ontario is assessed by the Ontario Property Asssessment Corporation (OPAC).
- Condo fees- If you live in a condominium, you usually pay a monthly fee for general building maintenance.
- Renovation - Structural repairs, especially to older homes.
- Maintenance - A cost that varies depending on the style, size and age of your home. You may also have to pay for unexpected repairs and replace expensive things such heating and cooling systems.
First-time buyers are often surprised by the hidden costs of home ownership. These costs include things such as property appraisal fees, home inspection fees, service charges for connecting utilities, moving expenses and property insurance. You might be surprised by how many people can be involved in buying a home - real estate agents, lawyers, inspectors, appraisers, etc.
The Canada Mortgage and Housing Corporation (CMHC) has many tools to help you find out how much you can afford. Also, be sure to read this useful publication - The ABCs of Mortgages. It outlines the terms and conditions of your mortgage, your rights and responsibilities, and tips on how to pay your mortgage off faster.
House or Condo?
Ontario has 2 categories of home ownership: full ownership and condominium ownership. Full ownership means that you own the entire property, including the buildings (e.g., house, garage) and the land. You are responsible for paying the mortgage, property taxes and utilities (e.g., electricity, water). You are also responsible for all maintenance and repairs.
If you own a condominium, you own a unit in an apartment building or townhouse complex, but not the building or the land. You are responsible for paying the mortgage, property taxes and utilities for your unit. Condominium owners join together in a corporation and elect a board of directors to manage the building and the land. You pay a monthly fee to the condominium corporation towards maintenance and repairs.
- The ABCs of Condominiums - A brochure with information about what to think about when you buy a condominium. From the CMHC. Available in many languages.
- The ABCs of Mortgages - This publication outlines the terms and conditions of your mortgage, your rights and responsibilities, and tips on how to pay your mortgage off faster.
- Buying a Home: Who You Need on Your Team - Information about the people who can be involved when you buy a home in Canada. From the CMHC. Available in many languages.
- Buying Your First Home in Canada: What Newcomers Need to Know - A brochure with information about the process of buying a home in Canada. From the CMHC. Available in many languages.
- Canada Mortgage and Housing Corporation (CMHC) - An agency established by the Government of Canada to ensure safe, secure and affordable housing for Canadians. The CMHC Web site provides information about CMHC products and services, home financing and industry research.
- Homebuying Step-by-Step: A Consumer Guide and Workbook - An online booklet that walks you through the eight steps of buying a home, from assessing your needs and understanding the housing market to closing the deal and moving in. The booklet includes charts, graphs and worksheets. Prepared by Canada Mortgage and Housing Corporation. In HTML or Adobe Acrobat format (1.6 MB).