When it comes to home ownership, there’s a lot to wrap your head around. But, understanding basic financial concepts can pay off big time in the long run in the form of savings.
When you’re looking at buying a home, there are a lot of expenses to consider in addition to the mortgage payment*. To help better understand what to expect when buying real estate, here are some additional costs and factors to take into consideration.
CMHC mortgage insurance
If your down-payment is less than 20% of the price of your new home, you’ll need to have Canadian Mortgage Housing Company insurance on your mortgage. CMHC protects homeowners and their lenders against possible financial losses in the case of default and non-payment.
The cost of premiums range from 2.8% to 4% of the total value of your mortgage and you can find more details about CMHC insurance on their website.
Purchasing home insurance to protect your property, the home structure and your personal belongings is a good idea. Home insurance rates vary depending on where you live and a number of other factors such as the age and size of your home.
When making an offer to purchase a new home it’s custom to include a home inspection as a condition of acceptance. Before investing a big chunk of your personal savings into home ownership it’s a smart idea to have a professional look at the structure of the home to ensure there aren’t any big problems brewing below the surface.
If you’re planning on building a fence or an extension to your new home, you’ll need to order a property survey. The cost can be up to $1,500 and it provides information on the size and boundaries of your property and land.
Home ownership isn’t as simple as: you find a house you love, make an offer, get a mortgage and move in. There are real estate agents, notaries and financial advisors involved. Plan to set aside up to $2,500 for legal and closing costs when buying your home.
This fee covers various expenses such as the cost of the land deed transfer from the previous owner to yourself and registration of the title.
If moving was easy than everyone would do it. When it comes to professional services, sometimes the cost is worth the expense. Moving expense are a variable cost depending on who you hire, but new homeowners should set aside at least $1,500 for moving expenses.
Most moving companies price their services based on weight, time and manpower. Shop around to get at least three quotes and ask the moving company to visit your current residence to take an inventory and provide an accurate quote.
Home ownership is a milestone in your life, it’s also a big financial commitment – that’s why it’s best to be prepared. A financial advisor can help you budget and save for your first (or next) home. Contact me today and let’s create a plan to help you achieve home ownership.
* Banking products and services offered through referral