11 Expenses to Expect
Whether you are considering buying your first house or are looking for a bigger one, there a many expenses over and above the purchase price that you need to plan for right from the moment you start looking for a house. These additional costs can take you by surprise and turn the signature of the contract into a nightmare if you are not well informed and prepared to deal with them.
Some of these costs are to be paid only once while others might be on a monthly or annual basis, and are over the ones you expected to pay. All these costs do not apply to all situations but it’s better to know what they are ahead of time in order to prepare a realistic and complete budget.
Remember that buying a house will constitute the central point of your financial situation.
Whether it’s your first, second or tenth house, several details must be considered all along the process. The last things you need are unplanned expenses that are revealed to you too late in the process, meaning at the moment of taking possession of your new house.
Read the list of the following items carefully and make sure you include everything in your budget while planning the purchase of a house.
The last things you need, are unplanned expenses revealed to you too late in the process, meaning at the moment of taking possession of your new house.
1. Evaluation fees
The lending institution will probably ask for the property evaluation of the house you wish to buy and you will have to pay these fees. The cost of such an evaluation varies from $175 to $400.
According to the amount of cash you will put down, the lending institution might decide to add the amount of property taxes (municipal and school) to your mortgage payment. And even if you repay them to the actual owner as part of the notary adjustments, you will have to start immediately to pay them together with your mortgage payment to build a reserve for the next payment date.
3. Land surveying fees
When you buy an existing house (as opposed to a new one), the bank can require an updated version of the certificate of location. If your offer to purchase did not already include it as being the responsibility of the seller, you will have to pay fees ranging from $500 to $800 for such a document.
4. Insurance for the property
Home insurance covers the reconstruction of the property (replacement value) in case of destruction and covers the contents (theft and fire). Your lending institution will require proof of insurance before releasing the funds for the signature at the notary.
5. Legal fees
Even the simplest transaction must be duly signed at the notary and registered at the Publicity of Rights Office. Inform yourself about the fees charged by various notaries. Costs will vary based on the complexity of the file and the services offered by the notary.
6. Mortgage insurance fees
If you do not deposit the required minimum amount in cash to get a “conventional” loan from the bank you will have to pay an insurance premium. This premium represents from 0.5% to 3.5% of the total amount of the mortgage. Payments of the premium are usually added to your monthly payment.
7. Mortgage brokerage fees
A mortgage broker has the right to require to be compensated for analyzing various offers from lending institutions. However, it is important to “shop” since many brokers will offer this service for free because they are compensated by the lending institution.
8. Moving fees
The costs of professional moving companies average between $80 to $125 an hour for the truck and 3 men. The cost increases from 10 to 20% during the 1st of July period. If you plan to move over 40km away to your full-time or parttime employment, this move could be very smart!
9. Condo fees
It is important to know if a special tax relating to exceptional infrastructure expenses (sidewalks, aqueduct, sewers, paving) will apply to the property you’re interested in buying. These infrastructure fees might amount to thousands of dollars in addition to municipal taxes for a predetermined number of years.
11. Transfer tax and others
This tax applies evenly in all municipalities for the transfer of title to property, whether for a house or for land. Commonly referred to as a “welcome tax”, it must be paid within three months of the signature. In some municipalities and in some circumstances, a “green tax” can apply for an important expansion requiring a new cadastre.
We all dream about owing our own house and stop paying a rent. If you are like most of tenants, you feel trapped in the walls of an apartment that you do not own. You feel helpless and you can’t see the day when you will buy your own house.
Regardless how long you have been a tenant or how difficult your financial situation seems, the truth is some little known information might help you make the move to change your status from a tenant to an owner. Thanks to the information, you will learn to:
Save money for your down payment Stop giving money to your landlord Stop wasting thousands of dollars in rent
6 little known facts that can help you buy your first house.
The problem most tenants face is certainly not their incapacity to meet their monthly payment. Everybody knows that this obligation has to be met the first day of the month. The problem is rather to accumulate enough capital to make the first deposit on a house.
Saving this amount of money is not as difficult as you might think if you know the six following facts.
a. You can buy a house with much less cash than you think.Local or national programs (such as the First Time Home Buyer’s Program) exist to help access the real estate market. You can also qualify as a first time home buyer even if your spouse owned a house before, as long as your name was not registered as co-owner. Make sure your agent is well- informed and knowledgeable about the home buyer’s programs in order to offer you all the possibilities.
b. You could get some help from your financial institution for your initial deposit and acquisition costs.Even if you don’t have the initial deposit available, if you don’t have debts and some net worth (like a fully paid car), your financial institution might lend you the funds for your initial deposit which would be secured by that asset.
c. You might find a seller who can help youSome sellers might grant a second legal hypothec lien. In this case, the seller becomes more or less the lending institution. Instead of paying him/her the cash for the house, you pay monthly payments.
d. You can create a cash deposit without incurring debtsBy borrowing
money to invest in an RRSP until the required amount is achieved, you can benefit from a tax credit that you will use as cash. It is true that the money borrowed can be technically considered as a personal loan, but the monthly payment might be lower. Then, the money invested in the house and in the RRSP is yours.
e. You can buy a house even if you have some credit issuesIf you can’t get the minimum amount in cash or provide security for a loan because your net worth is too low, lending institutions will still accept your mortgage request.
f. You can, and you should, be pre-qualified for a mortgage loan before starting your researchThis is easy to do and will provide you with peace of mind when the time comes to buy a house. Mortgage brokers can help you obtain an approval in writing at no cost and with no obligation. This can even be done over the phone. Better than a verbal approval, written pre-qualification is like having cash in the bank account. You will receive a certificate that guarantees the amount of your mortgage loan; very useful when you finally find the house you were looking for.Consider asking a professional specialized in mortgage loans. Using his or her services can make the difference between obtaining a mortgage and remaining a tenant forever. Usually, there are no fees to obtain the information. Then why on earth would you continue to waste thousands of dollars in rent when you could take a few minutes with your agent to talk about your specific needs in order to stop renting an own a house.This conversation will not cost you anything. And of course, you should not feel obliged to buy a house at the moment you read these lines, but take the time to explore various opportunities, discover ways to own a house, imagine how informed and relaxed you will feel when the time comes to make this important decision.