11 expenses to budget
Whether you are planning to buy your first home or you are upgrading to a larger one, there are many expenses in addition to the sale price that you must plan for while you start your search. These additional costs can take you by surprise and transform signing at the notary into a nightmare, if you are not well informed and prepared for such eventualities.
Some of these fees are paid only once, while others represent a monthly or annual commitment on top of your expected costs. These costs do not apply in all situations but you are better off knowing about them in well enough in advance to set a realistic and comprehensive budget.
Remember that buying a home is a key part of your financial snapshot. Read the list of items below and make sure you have budgeted for your next purchase.
Unexpected expenses that pop up at the last minute are the last thing you need when you take possession of your new home.
1. Assessment fees
Your lending institution will probably request an assessment of the property. You are required to cover this cost.
Based on your down payment for the property, the lender may decide to include property tax payments (municipal and school taxes) in your mortgage payments. Even if you repay the current owner for taxes once the adjustments are made at the notary’s office, you will have to start making tax payments immediately to build a reserve for the next tax deadline.
3. Survey costs
When you buy an existing home versus a new home, the bank may require an updated certificate of location. If your offer does not spell out that this is the seller’s responsibility, expect to pay between $500 and $800 to have a new certificate drawn up.
4. Property insurance
Property insurance covers the construction of the building, at replacement value, in case of destruction and insures the contents of the home against fire and theft. Your lender will requir proof of insurance before releasing the funds at the signing.
5. Legal fees
Even the simplest transaction must be duly signed at the notary’s and registered at the Bureau de la Publicité des droits immobiliers. Find out about the cost by contacting different notaries. The cost will vary based on the complexity of the case and the services they provide.
6. Mortgage insurance costs
If you do not have the minimum percentage in cash to use as a down payment to obtain what the banks refer to as a conventional loan, you will be required to pay a premium, which represents between 0.5 and 3.5% of the total mortgage amount. Mortgage insurance payments are usually added to your monthly payment.
7. Mortgage Brokerage fee
Mortgage brokers are entitled to charge for their services, i.e. lobbying on your behalf at various lending institutions. However, we suggest that you shop around as many brokers will provide their services for free since the lender covers their fees.
8. Moving expenses
Professional moving companies charge between $80 to $125 an hour for a truck and three movers. The prices increase by 10 to 20% if you decide to move on July 1. If you are moving more than 40 km from where you work, this move could prove profitable for you (details to follow). (More detail).
9. Condo fees
Condo owners must pay monthly fees for the upkeep of common areas, such as stairs, landscaping, snow removal, etc. These fees vary based on the type of building and the decisions made by each individual condo board.
Find out whether you are responsible for special taxes on exceptional infrastructure expenses (sidewalks, sewers, paving) for the property you wish to buy. Such costs can add thousands of dollars in addition to taxes for a set number of years.
11. Transfer tax and other
This tax applies in all municipalities on the transfer of a property title, for land or a home. Referred to as the Welcome Tax, it must be paid within 30 days of receipt of the notice. A green tax may apply in some municipalities and in certain circumstances, especially in the case of a major expansion that requires a new cadastre.