Beyond a Mortgage, what are the costs involved with buying a house?

You’ve decided to buy a house – congratulations! You’ve met with a fantastic mortgage agent or mortgage broker (like me), got approved for a mortgage, and have had your offer approved for the house of your dreams. But if this is your first time buying a house, have you considered what expenses come next? Buying a house is more than just a down payment. When buying a house, a buyer will need to provide anywhere between 5-20% as a down payment (depending on the value of the house). Aside from that, there are a few additional costs involved with buying a house. As a first-time homebuyer, it’s good to be aware of these costs before you buy a property to ensure you are financially prepared for the entire cost of buying a house. In this article, I will review each one, what it is and how much it typically costs. 

Home inspection (optional)

When putting an offer in on a house, you have the option to make it a conditional offer pending a home inspection. A home inspection is optional but is recommended if you want to ensure the house you are buying doesn’t have any major structural issues or damage. Overall, home inspections are a good investment. Although you may not enjoy paying this fee upfront, it could save you a lot in comparison to a repair cost you weren’t prepared for after closing. 

Before you purchase a house, a home inspector can uncover any issues with the property. If there are any issues found with the house, this will allow you to negotiate with the seller. On average, a home inspection can cost anywhere between $300-$1,000.

Property appraisal 

When buying a house, lenders typically require an appraisal. An appraisal is an unbiased and professional option of the value of a home. Lenders use this to confirm that the value of the property you are purchasing is not less than the purchase price. Why would you spend more on a property when it’s worth a lot less, right? Although there is no set cost on an appraisal fee, it’s good to set aside anywhere between $300-$500. Some lenders will cover this cost for you, but in preparation have it set aside just in case you do have to cover this fee yourself.

Title insurance 

Title insurance is a policy that protects you and your lender against losses related to your property’s title or ownership. When you work with a real estate lawyer (which you will need to do), usually this cost is added in with the legal bill. In some cases, this is optional, but most lenders nowadays may require that you have a title insurance policy. 

Property insurance 

Property insurance protects you in the event of a disaster that affects your property. This can include anything from a fire to a tornado. In the event of a disaster, you will need property (or home) insurance to ensure your property is protected. A mortgage lender will not approve you for a mortgage unless you have proof of home insurance. The cost of property insurance will all depend on your personal details, the home features, and the amount of coverage you may require. The best way to get an estimate on cost is to call an insurance provider and request a quote.

Mortgage life, critical illness, disability, or job loss insurance (optional)

As a homeowner, you need to be prepared for anything. Unexpected health, disability, or employment changes can affect your ability to afford your home. That’s why it is good to consider applying for insurance when you get approved for a mortgage. Not only will this protect you and your home, but it will also help protect your family and any other dependents you may have. Again, the cost of this will all depend on your personal situation and the amount of coverage you require. Similar to home insurance, speak with an insurance broker to get an estimate or work with a broker, like myself, who is qualified to offer you insurance options in addition to your mortgage.

Land transfer tax 

Good old land transfer taxes. When you purchase a property or piece of land, you pay land transfer tax to the Ontario government when the transaction closes. When the deed of your new home is transferred into your name, your real estate lawyer will arrange for your land transfer taxes to be paid. The amount you owe will once again depend on the property you purchase and how much it was purchased for. If you are a first-time homebuyer, you may receive a rebate for part of the cost. In Ontario, you can receive a maximum rebate of up to $4,000. 

To learn more about this, click here for further information. 

Legal fees

As I mentioned above, you will need a real estate lawyer to help you navigate the complicated legal processes of buying a house. This includes reviewing the terms of an offer, preparing, and signing the paperwork, and conducting a title search on the property. Depending on the lawyer you choose to work with, the cost can vary. However, be prepared to pay around $1,500+ depending on who you are working with. 

Property taxes, utilities, and condo fees (where applicable)

Depending on the property, you may have to reimburse the previous owner for any taxes, utility fees, or condo fees they had to pay beyond the closing date. This allows both you and the seller to only pay for the utilities and additional costs for the period you both owned the property. The cost will all depend on what is owed back to the seller only if any of these bills overlap when you become the owner of the property.  

Moving costs 

Last but certainly not least are the moving costs. If you have a big family who’s willing to help you move, that’s fantastic. The more help you can get for free the better. However, if you have a long way to travel or you have a lot that needs to be moved, you will likely need to hire a moving company to help you. Depending on who you hire, how much work you can complete on your own, and how far you need to travel, moving costs can range anywhere between $1,000-$5,000. Doing as much as you can on your own, however, will save you money.

Have any questions? I’m here to help!

Are you worried about being able to afford the additional costs of buying a house? Or are you looking to get pre-approved for a mortgage? I can help! With my years of experience, I can not only get you pre-approved, but I can also give you the right financial guidance you need when purchasing a house. I can also help you secure your financial future by walking you through the numerous insurance options available for you. To get started, give me a call today at 705-315-0516 or set up a virtual meeting with me by clicking here. Together, let’s make your dream of homeownership a reality!