Buyers Should Be Prepared For Some Added "Out Of Pocket" Expenses When Purchasing A Home
Buying a home is an exciting and stressful time in one's life. Saving for a down payment when purchasing a new home is great! Good work!!
But... a down payment and a mortgage are not the only expenses that buyers should be thinking about! Continue reading below for a list of potential expenses that home buyers can run into on their purchasing journey
Property Valuation Fee
Your lender may want to do an appraisal of the home to determine how much money they are willing to lend you for a mortgage. This is the fee for determining the property lending value for mortgage purposes. This value may or may not be the same as the purchase price of the home. Depending on the lender, it could cost buyers upwards of $500.00
A survey outlines the boundaries and measurements of the land. Some lenders require a survey of the property so that there is no confusion with neighbouring properties. Lenders may accept the last survey that was done on the property so make sure to ask if there was a survey done on the land and when it was done! This can cost buyers anywhere from $1,000 - $2,000.
Home Inspection Fee
When purchasing a home it is wise to have a home inspection to evaluate the structure and components of the home. A home inspection will provide you with a written report detailing any issues the inspector may find. The cost of a home inspection will vary depending on the age, size, and location of the home.
Land Transfer Tax
Provincial Land transfer tax is paid whenever a property is purchased. First time home buyers may be exempt from a portion of this cost. Your lawyer will arrange for land transfer taxes to be paid when the deed to the new home is transferred in your name. When purchasing property in Toronto, buyers are also subject to a municipal land transfer tax. To estimate the cost and obtain further details, please visit the province of Ontario's Ministry of Finance wesbite.
Lawyers manage all of the legal paperwork when acquiring a mortgage and assess the title to the property when purchasing. Lawyer fees can get quite expensive and are not exempt from HST.
Title insurance is optional and protects you from title defects, errors, and omissions including the public registry and existing surveys. The cost of title insurance varies based on the property type and purchase price but won't break the bank! It's definitely something to consider for peace of mind. Talk to your lawyer about your options.
Home insurance provides protection for the contents of your home and damage related to the home. Home insurance will vary depending on your insurer and policies. Do your research!
Mortgage Default Insurance
If you have less than 20% for your down payment, your lender will require you to purchase mortgage default insurance. This type of insurance protects the lender in case you no longer can make your mortgage payments. This insurance may be included in your regular mortgage payment. Talk to your lender.
Life Insurance or Mortgage Life Insurance
This type of insurance is optional and protects the borrower. If something should happen and you are unable to make your mortgage payments, this insurance protects you and your family. Costs vary and may be included in your regular mortgage payments. Talk to your lender.
This can include interest on any gap between the closing day and the first payment date of your mortgage, any prepaid property taxes or any prepaid utilities made by the seller. Speak with your lawyer.
Other Costs To Consider
Service hook-up fees
Renovations & Repairs
Some fees like appraisal can be negotiated with your Financial Institution, they may pay if they want your business. Don’t accept the status quo, do your research and shop around!
To find the best available lenders and rates, work with a mortgage broker!
This is not a complete list, as there may be other costs that arise. Put a little extra money aside for additional costs to save yourself from any added stress.
Engel & Völkers Niagara