Buying a home comes with a lot of responsibility and a lot of costs. In this blog, we run through various hidden costs to expect when buying a home.
It’s important to be aware of these costs before making one of the biggest purchases in your life. There’s more to just the downpayment and a mortgage when it comes to being a homeowner.
Having a realtor who can keep you informed on these costs saves you time, money and stress! If you’re looking to buy a home in Vancouver, BC – Contact Top Vancouver Realtor Leo Wilk about your real estate needs.
Certain costs are straightforward and are paid upfront such as service costs related to homebuying.
Property Transfer Tax
The Property Transfer tax is charged at a rate of: 1% on the first $200,000, 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000, and 3% on the portion of the fair market value greater than $2,000,000.
Prepaid Property Taxes or Utilities
You must reimburse the Sellers for any prepaid taxes or utilities on your Condo. These costs appear in the Statement of Adjustments prepared by your lawyer or notary.
Mortgage Default Insurance and Application Fee
If you get a high-ratio mortgage (less than 20% down payment), you must buy mortgage default insurance from CMHC or a private company. An insurance fee will be charged that varies according to the amount of the down payment (5%,10%,15%). This insurance premium is usually added to the mortgage of your Condo. You will also have to pay an application fee which may vary from $165-$235.
Your mortgage lender may require an appraisal of the condo. This can vary from $150-$350 depending on the location and type of the property. I always recommend asking for the lender to waive the fee.
This is included in your strata fees for Condo owners. Home owners will want to get insurance before closing on the home.
Get a professional to tell you about potential maintenance costs. Most Realtors will recommend that you include a Condo inspection as a subject in your offer. Costs may vary from $350-$500 with larger homes costing more.
Lawyer/notary fees vary according to the complexity of the transaction. Condo transactions are a bit more complex. Fees may vary from $650 for a simple transaction to $1500.
This may include fees to the Land Titles Office etc. These fees may be approximately $300 and will appear on the Statement of Adjustments prepared by your lawyer or notary.
OTHER FINANCIAL COSTS
Other costs are longer term costs that come up after buying a home.
Annual Property Tax
Check what the property tax of the previous year was for the home you want to buy. This gives you an idea of how much you will need to pay for taxes in the next years.
Depending on location, your cost of living can change. Are you moving to an expensive neighbourhood or a cheaper area?
Will you have to commute to work by transit or car? These both have costs to consider.
If you live downtown, you are most likely paying a higher price per square foot for your property. However, you have the convenience of city living and being close to everything you need.
And if you aren’t a fan of the hustle and bustle, you may opt to take that money and buy a singer family home in the suburbs with a slower lifestyle. But maybe with a longer commute and expenses in gas.
Home maintenance can include maintaining your furnace, lawn, hedges, gutter cleaning, etc.
Has the home been well maintained or not? What needs to be fixed in the next 3, 5, 7 etc. years? Realtors can help piece this together. So can home inspections – but it comes at a cost as previously mentioned.
For condo owners, these costs may come in the form of strata fees. Check what strata fees cover in your building if buying a condo or strata managed property. Make sure these fees are not too high for your budget! Fees include amenities and maintenance but every property is different in how much the strata covers, so make sure to double check.
Increase in Utilities
If you’re moving to a home with greater sq ft, you should consider the increase in heating, water, gas, etc. If you were renting before, this may have been included in your monthly costs so look into what utilities cost on average for your new place. Winter times may incur more costs for heating!
Consider these Hidden Costs when Buying a Home with Professional Help
Working with professionals who see homes every day is so important. They know what to expect and provide expert advice in the real estate process. They provide exact information on hidden costs when buying a home.
After all of these additional costs are taken care of, you are ready to buy your new Vancouver property!