Are you financially prepared for upgrading? True costs of owning a house.

The biggest housing trend during the pandemic is about escape the city condo and up size into the bigger freehold property.

Everyone is looking for the extra space for home office, it became emerging must have trend to accommodate the acquired Work from home lifestyle if not indefinitely. 

Freehold property is not only coming with higher price tag than most common condo type, but also with associated with other hidden costs.

Buyer beware, most first-time house buyer underestimate about the costs involved in being a homeowner. 

Let’s run the number today to see if you are fully understanding the financial liability.

Let’s use this beautifully renovated semi-detached house in Riverdale as example. Let’s break down into two section: the daily ongoing maintenance and up-keeping, and the unforeseeable out of pocket repairs.

Like condo, beside property tax, utilities and internet and cable, there is no obligatory maintenance fee for free hold property.

However, the hidden cost most people forgot about are so called “pending maintenance “every home owner should budget extra for.

Let’s break down into 2 categories:

A: The ongoing upkeep and general maintenance.

1. home insurance 

It’s obligatory to have fire insurance if there is mortgage on the house. Just like car insurance you pay monthly. There are many factors to determine the premium you pay. For an updated house like this one, it should be between $100- $200 per month.

2. Pest control - there is reason Toronto has been called the "raccoon capital of the world." Along with raccoons, rodents and termites and wastes are common nuisance. Budget $300-$500 for every couple of years to remove the unwelcomed guests.

3. House sitting and security 

With organized break in crime and porch pirates become more common throughout GTA, make sure you invest in good security camera and system. 

Budgeting extra for house sitting if you travel often and extensively. Especially during the winter month, make sure someone check in every couple of days to check the furnace to avoid frozen pipes.

4. Your time 

Your time is the most expensive item! 

Moving to a bigger house means you do more chores unless you wisely like to contract out everything. How much time would you trade off your precious leisure time to mow the lawn and trim the hedges? 

5. Cleaning 

The cleaning company usually charges $50- $75 per hour for two people. For a 3-bedroom house for weekly cleaning is around $150-$200.

Section B: Now let’s take a look at the “big items” or long-term replacement costs.

1. Mechanics

Furnace, Air conditioner and Hot water tank usually lasts 10-15 years. 

Each item costs around couple thousands to replace. Most home owner chose to buy furnace and air conditioner upfront, and rent hot water tank for easy maintenance.

2. Plumbing

Clogged drain in kitchen sink and toilet is the most common items, it should cost a couple of hundreds to fix. It becomes problematic if there are galvanized iron pipes in the old home, you have to replace them to eliminate mineral deposit.

3 Roof 

Asphalt shingles are one of the most common one used across GTA, it’s one of the most affordable option with the least life span of 10-15 years.

According to home star rating, the average cost of installation is around $4750.

There are other material options, like wood, metal and concrete, a good rule of thumb is the more money you spent the longer it will last.

4 MOLD removal 

Mold exists because of excessive moisture, it could grow in everting house especially in not properly insulated and ventilated area like basement, washroom, kitchen and attic.

You could hire MOLD specialist to come for overall inspection to determine the degree of treatment.

Small area removal job costs couple hundred dollars and larger job could cost around $3000-$6000.

I usually suggest to reserve 1% funds to set aside monthly for the big-ticket repairs and updates. 

Let’s drill of the numbers of this house to assume the actual sold price of $1,500,000. 

This table blow shows your estimated monthly carrying costs for a $1,500,000 home with a $1,200,000 mortgage at 5-year fixed rate of 1.89 % amortized over 25 years.

Please contact me if you are looking to upsize or have any questions regarding to the freehold property ownership, with extensive knowledge and renovation experiences, my team will provide you with full service of buying and selling strategy and related services.

It’s currently on the market for sale for $1,700,000 CND.