SO WHAT’S THIS GOING TO COST?
We won’t cost you anything, but there are costs.
Something that a lot of first time home buyers might not realize is that while the cost of using a mortgage broker is borne by the lender (not you, the buyer), there are costs you need to be prepared for when you buy your dream home.
You should be prepared to pay most of these costs up front, with cash in hand. Don’t rely on your credit card (the balance can work against you) and make sure you plan ahead.
While this post can’t provide specific amounts – there are just too many variables to consider – our mortgage professionals can help you navigate the costs you should expect, and provide you with realistic cost estimates once the size of your mortgage has been determined.
The following is an overview to give you an idea.
Mortgages with less than 20% down are required to be insured against default and while the premiums aren’t something you have to pay up front (they are added to the mortgage), the cost of the insurance needs to be considered when working out your calculations of the mortgage amount.
When you buy a home, there are legal fees and costs called disbursements paid to your lawyer, working on your behalf to arrange transfer of the title. These costs include things like courier fees, office expenses, and fees to the Land Titles Office. The cost varies based on how complex the transaction is. Your lawyer is the best person to give you an estimate of the costs. The lender will want to confirm that the funds are available, so you will be asked to show copies of bank statements providing a 90 day history.
Once you’ve bought your home, don’t forget about all the costs associated with moving! In addition to professional movers or a rental moving truck and supplies, you should also consider the cost of connecting utilities as some may ask for a cash deposit, as well as any new furnishings such as new window coverings. If you’re moving into or from a condominium, many of them ask for a move in or move out fee to cover the cost of holding the elevator. Canada Post charges a fee to complete a change of address. You may also want professional cleaners for both your old and new property.
Lenders also want to ensure the property is insured. Proof of property insurance will be required at your lawyer appointment.
In addition to the above costs of buying a home, there are other costs that you may be looking at as well.
- Your lender may require an appraisal of the property, which can range from $300-$500 for an average single family dwelling.
- A Real Property Report (which we recommend!), is a cost that the seller may cover but isn’t required to. An RPR can cost upwards of $700, but it depends on a number of factors such as fees set in the municipality the property is in.
- A home inspection may also be on your radar and the cost of that varies greatly based on the size of the property and the individual contractor you choose.
When you purchase a property you are required to pay property taxes. There are monthly installment plans available (in Calgary, it is called TIPP) or you can pay once, annually. If you choose not to go on TIPP, there will be a tax holdback paid to the lawyer to cover the current years taxes.
Feel free to get in touch if you have a question. It can be confusing but we want to be sure that you feel great about your purchase and we’re here to help.