Buying a home is one of the biggest financial choices you’ll make, especially in Canada’s competitive housing market. Many people plan for their down payment and monthly mortgage, but there are other extra costs that can surprise you. Here’s a list of these hidden costs to help you budget more accurately.
1. Land Transfer Tax (LTT)
Every province in Canada charges a Land Transfer Tax when you buy a property. This tax is a percentage of the home’s price. In some cities, like Toronto, you have to pay this tax twice—once to the province and once to the city—which can add up fast. Some provinces give first-time homebuyers a discount on this tax, but it’s smart to budget for it just in case.
2. Legal and Notary Fees
Legal fees are necessary to complete the home-buying process. They cover things like checking property ownership, registering the home in your name, and handling other paperwork. In Canada, legal fees usually cost between $500 and $2,500, depending on the lawyer and how complex the transaction is.
3. Home Inspection and Appraisal Fees
•Home Inspection: Although not required, a home inspection is strongly recommended to spot any potential problems with the property. It usually costs between $300 and $700.
•Appraisal Fee: Your lender might ask for an appraisal to confirm the home’s market value. This typically costs between $300 and $500.
4. Mortgage Insurance
If your down payment is less than 20% of the home’s price, you’ll need mortgage insurance from the Canada Mortgage and Housing Corporation (CMHC). This insurance adds extra costs to your mortgage, which can add up to thousands of dollars over time. The cost is based on a percentage of the loan amount.
5. Property Taxes
Most homeowners know they have to pay property taxes each year, but many don’t realize they might need to pay a part of these taxes upfront when they buy a home, depending on the time of year. Property tax rates differ depending on where you live and the value of your home, so it’s a good idea to check the rates in your area.
6. Moving Expenses
Moving costs can vary a lot depending on how far you’re moving, how much stuff you have, and if you hire movers. Moving within the same city might cost a few hundred dollars, but moving to another province could cost thousands. Don’t forget to budget for packing supplies or storage if you need them.
7. Utility Hook-ups and Adjustments
Setting up utilities like electricity, gas, and internet may come with installation fees, especially in a new home. You might also need to pay the previous owner back for any utility bills they’ve already paid, so be ready for these costs when you close the sale.
8. Title Insurance
Title insurance protects against potential title-related issues such as fraud, unpaid liens, or encroachments. Although it’s not mandatory, it’s a wise investment to protect your ownership rights. Title insurance generally costs between $250 and $500.
9. Condo Fees (for Condo Buyers)
If you’re buying a condo, you’ll need to pay condo fees (also called strata fees). These cover the costs of shared facilities and property maintenance. The amount you pay depends on the building’s amenities and location, and these fees can go up over time.
10. Renovation and Maintenance Costs
Although it’s not an official “closing cost,” many homeowners end up doing upgrades or repairs soon after moving in. Setting aside some money for things like renovations, painting, or repairs can help you settle in more comfortably without stressing about extra expenses.
11. Home Insurance
Lenders require you to have home insurance before finalizing the mortgage. The cost of home insurance depends on factors like property location, size, and age. It’s essential to budget for this ongoing monthly or annual expense.
Conclusion
When buying a home in Canada, being aware of these hidden costs can help you avoid unexpected expenses. Planning for these extra costs will make your home-buying experience easier and more financially secure.
