Buying a home can be the most exciting, frustrating and costly event you will likely ever experience!

 Aside from the obvious purchase price (and let’s hope you have a good agent to negotiate for you!) ,there are many additional costs that you do not want to come as a surprise, but so often do.

  Some of these budget stretching figures you may have anticipated and some you may have not, but best keep a checklist so as not to overlook this swell of expenses.

Quite a few of the Home Buyer’s expenses relate to MORTGAGES AND LENDERS. 

• Mortgage loan insurance is required when you need a mortgage loan that exceeds 80% of the purchase price of the property.  This coverage exists not to protect you, but to protect the lender from you defaulting on the mortgage.  The insurance premium is calculated as a percentage of the mortgage and is based on the size of the down payment in relation to the total purchase price.  Premiums can be paid in a lump sum or added to mortgage payments depending on the lender. An application fee will usually be incurred as well.

      How much will this be?  1.75% for over 80% financing up to 2.75% for 95% financing.

• A mortgage broker fee may apply If you use the services of a mortgage broker to arrange a mortgage on your behalf.

How much will this cost?  These fees vary dramatically, but more recently it is the lenders that are paying these fees.

• Your lender will require a property appraisal – an appraisal fee will likely be passed on to you.  The complexity and magnitude of the task will determine the cost.

How much?  For a typical house purchase the fee is under $500.

• While negotiating your purchase, you (via your real estate agent) may ask for an up-to-date land survey.  If one is not furnished, you may be required by the lender to have one done at your expense.

How much?  Approximately $1200.

• The lender will require proof that you have secured Property insurance for the replacement value of the house and the contents.  This is a must since your home is the collateral for the mortgage loan.

How much?   $500 and up annually.   

Some one-time fees you will joyfully incur include:

·      Home inspections, in some cases, are contracted by the vendor prior to listing the property.  If not, it is customary to include a home inspection in your offer.

      How much?  $400 to $500 depending on the size of the property.

·      A purchaser has the option of buying Title insurance to protect from problems with property title.

How much?  For a property valued at $400,000, title insurance is $200 and would rise to $800 for a $1,000,000 property.

·      We cannot forget about our LAWYER!  Even the most basic of home purchases will require the services of a lawyer.  Lawyer fees can cover costs associated with reviewing the offer, title searches, preparing mortgage documents and drawing up the title deed.

How much?  These fees vary from approximately $1000 to $2000.

·      Moving costs will vary.  Are you renting a truck on your own and ‘encouraging’ family and friends to help you move or are you hiring a capable moving company?  Consider if you have to professionally package and/or store any items.

How much?  Quite difficult to give an estimate here since this cost will vary with the size and quality of the move as well as the distance.

·      If you are purchasing a condominium, the seller will either provide a Status Certificate or you will need to pay for the certificate and supporting documents.  These papers outline the Condominium Corporation’s financial and legal state.

      How much?  The cost of a Status Certificate is $100.

·      Land Transfer Tax includes both Provincial and Municipal land transfer taxes.  Most real estate websites and the Toronto Real Estate Board site have land transfer tax calculators.  These taxes are calculated based on the purchase price as a fixed percentage and as percentages on a graduated scale. First time home buyers may qualify for some land transfer tax rebates up to a $2000 provincial rebate and a $3725 municipal rebate.

How much?  Definitely the most sizeable cost to incur.  Land Transfer Tax on a $500,000 property in Toronto would be $12,200.

·      In general, GST does not apply to resale homes but does apply to newly constructed homes.  However, the developer seller will most often include this GST in the purchase price.

·      Adjustments occur in most property transactions .The vendor must be credited on a prorated basis for taxes and utilities that have been prepaid beyond the closing date.

Whether your spending $200,000 or $7,000,000 for your new home the additional costs do add up! 

 The search for a new home can be very exciting, but also constitutes a major life shift.  Being prepared and forewarned for the costs that can lie ahead just make us all more savvy consumers.

Shari Greenglass was born in Montreal and moved to Toronto as a young girl.  As a Schulich School of Business M.B.A., Shari has worked in areas of Product Management, Advertising and Retail Management as well as starting some home businesses and operating as a consultant. With a husband, two daughters and two poodles, Shari still finds time to cook, bake, volunteer, travel, sell real estate and answer the burning question: “Why is your license plate PNKPOODL?”

Darling I love you but give me Park Avenue

- taken from the theme song of "Green Acres"