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:
- 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.
- What are the current costs for a home inspection?
- Will I need to budget for renovations?
- Will I need to budget for gardening equipment, tools or window coverings? These items can add up quickly.
- How many of the appliances or major items (furnace, roof, deck) need updating or replacing in the next few years?
- 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
3. Find your best mortgage rate
4. Property taxes
5. Home Insurance
6. It’s moving day!
Average moving cost with friends: pizza Average moving cost with movers: $300+
7. Keep saving for the future
If you can dream it, you can do it. Wherever you want to go, we'll help get you there.