Buying your first home?

Buying your first home? Know the hidden costs before taking the plunge.

Congratulations! You’re ready to make one of the biggest financial decisions of your life. Sound scary? It doesn’t have to be if you do a little research. Start by learning about the hidden costs of the home buying process and planning your spending.

1. It starts with a plan

Buying a home is a huge investment, but the cost of the property is not the only cost you’ll encounter. Map out all the expenses you can think of when buying a home by starting with these questions:

1. What are the legal and closing costs likely to be? These include things like the land registration fee, broker fees, title insurance and fees associated with surveys and certificates. Your realtor or your lender can help you figure this out.
2. What are the current costs for a home inspection?
3. Will I need to budget for renovations?
4. Will I need to budget for gardening equipment, tools or window coverings? These items can add up quickly.
5. How many of the appliances or major items (furnace, roof, deck) need updating or replacing in the next few years?
6. What will I need to have set aside to tackle unexpected home repairs or strata fees?

2. up: The Affordability Budget

List all the bills and monthly expenses you currently have, and then think about the additional items you’ll need to purchase for your new home. Calculate the cost of utilities, property taxes, insurance as well as inflation, and “just in case” expenses.

Book a free session with a personal banker. They can help you navigate the budgeting process, and help you to determine what you can afford, while still achieving your savings goals for the future. It’s important that you don't accidentally financially restrict yourself. They’ll also help you assess the strength of your credit score, which sets the framework for what lenders will be willing to loan you for your mortgage.

Establish how large your down payment will be, and whether or not you’ll need to have your mortgage insured by the Canada Mortgage and Housing Corporation (CMHC) or Genworth based on the property values that you’re looking at and the size of the payment you have to put down.

Consider options like the Home Buyers' Plan (HBP) - a program that allows you to withdraw up to $25,000 in a calendar year from your retirement savings plans (RSP) to buy or build a home for yourself when working this out.

Once you're ready, use a mortgage calculator to explore your options!

3. Find your best mortgage rate

Shop around to find the best rate. Did you know that a half percentage point less on your rate can save you a few thousand dollars per year? Often locally owned credit unions have great rates and are worth exploring. Check out First Calgary’s rates, and always make an appointment to find out the best possible rate you can get based on your personal situation!

4. Property taxes

You know those nice roads, street signs and schools by your new home? Well, it’s there because you pay for it. You pay property tax based on the value of your home. It’s due once per year, but it’s a good idea to save for it every month so you aren’t surprised with a big bill in the mail later. Check out The City of Calgary’s Tax Installment Payment Program (TIPP). 

Average municipal property tax for a single family home: $1,823.12 

5. Home Insurance

Now that you’re almost homeowner (yay!) you’ll need home insurance. Think about where you live and the potential hazards. Has there been localized flooding? You know now that every dollar counts, and fortunately as a First Calgary member, you get an excellent rate on home insurance. Not a member? Join up with a free No Fees For Me chequing account. Free? It’s nice to know that some stuff is!

6. It’s moving day!

Moving is a tough job. The cost can vary greatly on the number of friends you have and the number of friends you want to keep! If you decide to hire a moving van without movers, they can range per hour.

• Average moving cost with friends: pizza
• Average moving cost with movers: $300+

7. Keep saving for the future

Saving doesn’t stop once you’ve made your down payment. Factor your monthly savings needs into your budget. Cut unnecessary costs like banking fees, look for low insurance rates, and make your money work harder for you by starting up an investment portfolio. Your new home should not stop you from saving for your next “big dream”.

If you’d like to meet to review your options and budget, the team at First Calgary is more than happy to help.

If you can dream it, you can do it. Wherever you want to go, we'll help get you there.