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The Upfront Costs of Buying a Home

First Time Buyers

When you buy your first home, the amount you pay doesn’t end with the listing price. There are several other costs that you need to factor in when determining if you are ready to buy a home.

The costs you need to look out for seem menial, but they sure can add up fast! Some are quite obvious, but others are services that you never would have imagined you’d need to pay for in order to own a home.

The Upfront Costs of Buying a Home Include:

  • Down Payment
  • Home Inspection and Appraisal Fees
  • Legal or Notary Fees
  • Moving Costs
  • Mortgage Default Insurance (When Putting Down Less Than 20%)
  • Land Transfer Tax
  • Title Insurance

The Down Payment

For a down payment on a home that’s under $500,000 you can expect to pay a minimum of 5% of the listing price upfront. For homes that cost more than $1 million, you’ll need to put at least 20% down.

Home Inspection and Appraisal Fees

The average home inspection in Canada will run you between $300-$600, and with an average home appraisal, you can expect to pay between $300-$500.

Land registration fees Land registration fees can vary between provinces, but Ontario’s website has listed land registration fees to be $900.

The government website reads, “The fee for a first registration of land under the Land Titles Act is now $900.00”

Legal or Notary Fees

To dot all the Is and cross all the Ts, you’ll need to have a professional involved. This could wind up costing you between $200 and $1200.

Potential repairs or renovations The cost of repairs and renovations really depends on what kind of home you bought.

Is it a finished product? Does it just need some new paint? Is there a family or raccoons living in the walls and eating your wiring?

The price of repairs can fluctuate, so getting a good estimate on what will need to be fixed is key.

Moving Costs

Moving costs depend on the size of your home, and how much of your stuff will need to be moved. If you weren’t blessed with a large family you can bribe with a nice dinner, you’ll have to pay for the pros.

On average, a home with 3 bedrooms can cost you between $735 and $1300.

Mortgage Default Insurance (When You Put Down Less Than 20%)

Mortgage Default Insurance in Canada applies when a homebuyer puts less than 20% down payment on a home.

Homebuyers pay an insurance premium, a percentage of the mortgage, to providers, and as equity surpasses 20%, homeowners can request insurance cancellation.

It's a way to enter the market with a low down payment, but adds costs that you need to know about!

Land Transfer Tax (Provincial and Municipal)

Land Transfer Tax (LTT) in Canada is a fee you pay when you buy property. It's made up of both provincial and sometimes municipal taxes.

The amount depends on the property's value and location.

Provincial LTT is required in all provinces, while some cities add their own municipal LTT – LTT helps fund public services and infrastructure.

Remember to budget for LTT when buying a property, as it's an additional expense on top of the purchase price!

Title Insurance

Title insurance in Canada is a policy that protects property buyers and lenders from potential issues with the property's ownership history.

It covers problems like ownership disputes, unpaid liens, or other hidden claims that could arise after you make your purchase.

Unlike traditional insurance, which is paid annually, title insurance is a one-time premium paid at closing. It provides financial support if someone challenges your ownership or if unexpected issues emerge.

Sherwood is Ready to Help You Through the Mortgage Process

There are some more hidden and often unconsidered fees that you’ll need to prepare for and consider when buying your first home, but you don’t need to fear because we’ll help prepare you for the unknown!

If you want to learn more about what it takes to buy your first home, reach out to the Sherwood Mortgage Group at 1 - (877) - 241 - 6001!

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