Before you calculate the amount of your down payment and determine what you can afford, it's a good idea to set aside a few thousand dollars to cover the extra costs that seem to spring out of nowhere. Here is an overview of costs you could encounter. The good news is that not all of them will apply.
Property Taxes: If the Seller has paid a portion of the taxes in advance, you will be responsible for reimbursing the Seller on closing. Plus, if you have a high-ratio mortgage, your lender may require that you have your property taxes added to your mortgage payments.
Utility Fees: Utility fees are calculated through a meter so you will be responsible for paying what you have used up on the meter.
Land Transfer Tax: This applies in most porvinces and ranges from 1% to 4%. For instance in Ontario you'll pay 1% of the first $55,000-$250,000 and up to 2% of any amount over $400,000. (see the separate article for formulas)
Survey Fee: Your lender will require a survey. You can make it a condition of the Offer to Purchase that the Seller provide a survey, or you will have to have one done. If there is no survey available, you may purchase Title Insurance in lieu of a survey which saves you a few hundred dollars.
Appraisal Fee: A basic appraisal usually costs under $250
Property Insurance: Your lender will insist that you have insurance on your property because your home is used as a security for the mortgage.
Service Charges: You'll be charged for telephone, cable and a variety of other services that you hook up at your new home.
Lawyer: Each real estate transaction requires the assistance of a legal professional to review the Offer to Purchase, search the title, draw up the mortgage documents and take care of the details on the day of closing. Lawyers fees range widely depending on the complexity of the transaction. I can provide you with a list of lawyers.
Mortgage Loan Insurance Premium and Application Fee: Mortgage loan insurance will be necessary if you have a high-ratio mortgage (less than 25% down payment). The application usually costs $75 with a valid appraisal, otherwise its $235. The acutal insurance premium will range from .05% to 3.75% of the purchase price and is added onto the mortgage.
Moving Costs: Whether you've decided to do it yourself or hire a moving company, now is the time to budget for the moving costs involved.
Status Certificate: If you're moving into a condominium (town house or apartment) this certificate outlines the condominium corporation's financial and legal state. It could cost you $100.00.
Home Inspection Fee: For around $400, dependng on the size of your home, you'll receive a complete wirtten report about the condition of the structure. Do your research and hire a reputable firm.
Renovation and Repairs: Your home inspection may indicate the need for some general repairs or a major project. Have some money set aside, particularly if you are purchasing an older home.
Redecoration: Your taste will be different from the previous owner. Set aside money to paint. Prepare a list of things you can live with for now and decorating faux pas that need immediate alteration.
