Now that my husband and I have finally started to save for a home of our own, it’s important that we look into every single detail that is involved with purchasing. It’s not as simple as picking a house you like and moving in. Buying a house is actually a lot of work.
We have many friends and family members that are always telling us we should move into our own place. They say that our mortgage would be the same price or less than our monthly rent. Apparently, they know nothing about how expensive it is to own a home.
There are so many fees involved with buying your own house such as land transfer tax, lawyers fees, realtors fees, etc. Not to mention a 20% down payment!
Let’s not forget that if something goes wrong with the house, like the roof is leaking or the hot water heater stops working – we are 100% responsible. No more running to the landlord to fix our problems. It’s a lot of money and we are not going to jump into home ownership until we are 100% ready (both financially and mentally).
Hidden Costs When Buying a Home in Canada
These are the fees you can expect to pay when you purchase a home in Canada (I’m going to use a $500,000 home as an example):
20% Down Payment
If put down any less than 20%, you will have to pay mortgage insurance (which costs $60-$175 per month). Total = $100,000
You’ll definitely want to hire a lawyer to review the terms of the offer and make sure you aren’t getting a bad deal. Total = $2000 (approximately)
Land Transfer Tax
In Ontario, 0.5% is charged on the first $55,000, 1% is charged on $55,000 – $250,000 and 1.5% is charged on $250,000 to $400,000. $500,000 would be a $6475 tax. Check out Royale LePage for the Land Transfer Tax Calculator. Total = $6475
This does not cost much money and in my opinion, is not only a good idea, but a necessary “to-do” before you sign on the dotted line. It’s important to know if there is anything wrong with the home before you purchase. Prices vary on the size of the home. Total = $500 (approximately)
You will need to pay any interest accrued between your first mortgage payment and your closing date. Prices vary by payment frequency and closing date. Total = $500 (approximately)
If you have a mortgage, you have home insurance. You have no choice in the matter. Prices vary on the cost of the home and the contents inside. Total = $800 Per Year (approximately)
This time around, we are hiring movers – but you don’t have to. Do it yourself and save lots of cash. Total with movers = $1000 (approximately)
You should be setting aside 3%-5% of your home’s value every year for maintenance. You never know when you will have to get the roof re-shingled, the windows replaced or the carpet removed?. Total = $20,000 Per Year
This may not apply to everyone, but for us, there will be things we will need to buy as soon as we move in like a couch set, bedroom set and probably a dining room set as well. We want to make sure that we have the money already saved so we can get these things right away. Total = $10,000
That is a grand total of $141,275.00 that we would need to save before we can buy a home of our own (if we were purchasing one for $500,000).
So, you see, it really isn’t cheap to purchase a home. If you are thinking about purchasing a home of your own, be sure to research everything that’s involved.