Additional Costs When Buying
Additional Costs When Buying a Home
Many first-time homebuyers focus primarily on the purchase price of a property but may not be aware that there are several additional costs and fees involved in buying a home. These extra expenses can add up, and it’s essential to budget for them ahead of time. Below are some of the common additional costs you should be prepared for when buying a home:
Home Inspection
Before finalizing a purchase, it's crucial to have a professional home inspection done. This helps identify any potential issues with the property, such as structural problems, plumbing, or electrical issues, giving you peace of mind or the chance to negotiate repairs.
Property Appraisal
A property appraisal ensures that the home’s value aligns with the purchase price. Most lenders will require this to ensure they are not lending more than the home is worth.
Status Certificate (for Condos)
If you're buying a condo, you’ll need to request a status certificate. This document provides important information about the financial health of the condo corporation and outlines any legal issues, current fees, or upcoming repairs.
Legal Fees & Title Costs
Legal representation is required for the transfer of property ownership. You’ll need to budget for lawyer fees, which include title searches and other associated costs.
Title Insurance
Title insurance protects you from any potential ownership disputes or claims against the property after the sale is completed.
Land Transfer Tax (Buyers Only)
In Ontario, buyers are required to pay a land transfer tax when purchasing property. This is calculated based on the purchase price and varies by municipality.
Establishing Services
When moving into your new home, you must set up essential services such as utilities, internet, and possibly rental services (water heaters, HVAC systems, etc.). Transfer fees may be involved in setting up these services.
Moving & Storage Costs
Budget for the cost of moving, whether you're hiring professional movers, renting a truck, or needing temporary storage.
Repairs & Upgrades
Even in move-in-ready homes, you may want to budget for immediate repairs or upgrades such as painting, flooring, or landscaping.
New Furniture or Appliances
Buying a new home often means purchasing new furniture or appliances to fit your new space. This is a significant additional cost many buyers don't anticipate.
New Home Warranty (TARION)
If you’re purchasing a new build, you may need to consider the costs of enrolling in Ontario’s TARION warranty program. This offers protection for certain issues that may arise with your new home.
Capital Gains or Additional Taxes
If you are purchasing an investment property or a second home, there may be capital gains or additional taxes to consider. It's important to speak with a financial advisor about how these taxes apply to your specific situation.
Average Closing Costs
In Ontario, closing costs typically range between 1.5% to 4% of the purchase price. For example, if you're buying a home for $500,000, your closing costs may range from $7,500 to $20,000.
Being aware of these additional costs can help you budget accurately and avoid surprises during the buying process. Make sure you factor these expenses into your overall home-buying budget to ensure a smooth transition into your new home.