It is important when you decide to buy a home that you have a full understanding of the costs associated with your purchase. People often assume the only cost of buying a home in our real estate market is the price of the home, and that is it.

There are a lot of additional costs that you must be prepared for when buying a home, and it is important that you are fully aware of them. You will need to have some additional money set aside to cover these costs unless you have already made arrangements with your bank to cover these costs and absorb them into your mortgage.

Your largest initial expense will be your deposit. As a first time buyer (or even a repeat buyer) this should generally be approximately 5% of the purchase price; however, it will be up to the seller to determine how much they want in order to feel confident that you won’t walk away from the deal without your deposit if you need to. You should also be prepared to pay:

  • Legal fees and disbursements
  • When buying a new home (newly built / never lived in) you are sometimes responsible for GST and/or PST if applicable
  • Property or land transfer tax
  • Adjustments (payable to the vendor, such as taxes)
  • Interest
  • Property Taxes
  • Utility Payments
  • If in a Condominium type of ownership, condo or strata fees
  • Home inspection fees or any other ancillary service fees requested by you as the buyer (furnace inspection, appraisal fee, water quality/quantity tests for acreages)
  • Mortgage broker’s fees (if applicable)
  • Mortgage loan insurance premium (if less than 25% down) plus application fee
  • Moving expenses
  • Renovations, repairs, paint, carpeting, and window coverings
  • Furniture
  • Property/Condominium Insurance

Additionally, once you have purchased your home you will incur regular expenses on a monthly, quarterly, or yearly basis such as:

  • Mortgage payments (you can do these weekly, bi-weekly, or monthly)
  • Water/sewer payments
  • Electricity and gas services
  • Cable/telephone/internet services
  • Property taxes
  • Strata or Condo fees
  • Repair/Maintenance expenses
  • Homeowners insurance

Don’t let this list of additional expenses worry you about buying a new home. All of these costs are part of purchasing a home and are well worth it. If you are interested in buying real estate, be sure to contact us. When working with you, we will sit down and go over a detailed list of expenses you will incur when buying a home. There are different expenses depending on the type of home you purchase.

We can also put you in contact with many different vendors throughout the city that will be able to provide you competitive pricing on many of the associated costs. Be sure to contact us if you are looking to buy in the local real estate market.

Mortgage Payment Calculator

Royal Bank Mortgage Calculator

When browsing real estate listings for a new home, the first step is to figure out how much you can afford. Affordability is based on the household income of the applicants purchasing the house, the personal monthly expenses of those applicants (car payments, credit expenses, etc.), and the expenses associated with owning a home (property taxes, condo fees, and heating costs). The calculator below will show you the maximum purchase price that you can qualify for.

You also need to determine if you have enough cash resources to purchase a home. The cash required is derived from the down payment put towards the purchase price, as well as the closing costs that must be incurred to complete the purchase. Ratehub.ca helps to estimate the closing costs using their affordability calculator (please see link below).

Mortgage Affordability Calculator

Mortgage Default Insurance or CMHC Insurance
 

Mortgage default insurance, which is commonly referred to as CMHC insurance, is mandatory in Canada for down payments between 5% (the minimum in Canada) and 19.99%. Mortgage default insurance protects lenders, in the event a borrower ever stopped making payments and defaulted on their mortgage loan.

Although mortgage default insurance costs home buyers 2.80% – 4.00%1 of their mortgage amount, it does allow Canadians, who might not otherwise be able to purchase homes, access to the Canadian real estate market. Without it, mortgage rates would be higher, as the risk of default would increase. Lenders are able to offer lower mortgage rates when mortgages are protected by mortgage default insurance, because the risk of default is passed along to the mortgage insurer.

Mortgage Insurance Calculator

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