Whether you are considering buying your first house or are looking for a bigger one, there a many expenses over and above the purchase price that you need to plan for right from the moment you start looking for a house. These additional costs can take you by surprise, if you are not well informed and prepared to deal with them.
Some of these costs are to be paid only once while others might be on a monthly or annual basis. All of these costs do not apply to all situations but it’s better to know what they are ahead of time in order to prepare a realistic and complete budget.
Read the list of the following items carefully and make sure you include everything in your budget while planning the purchase of a house.
The last thing you need, are unplanned expenses revealed to you too late in the process; meaning after you have an accepted offer or even worse, at the moment of taking possession of your new house.
1. Appraisal fees
The lending institution will probably ask for the property appraisal of the house you wish to buy. The cost of such an evaluation varies from $300 to $600, BUT, the lending institution typically pays this fee.
2. Home/Condo inspection
We highly recommend having your home or condo inspected by a certified building inspector. The costs can vary from $500-$900 depending on the property.
3. Taxes
You will be responsible for the Municipal and School taxes moving forward. The Municipal taxes are calculated from January 1 - December 31. And the School taxes are calculated from July 1 - June 30.
4. Insurance for the property
Home insurance covers the reconstruction of the property (replacement value) in case of destruction and covers the contents (theft and fire). Your lending institution will require proof of insurance before releasing the funds for the signature at the notary.
5. Notary fees
Even the simplest transaction must be duly signed at the notary and registered at the Land Registry Office of Quebec. The notary's fees will vary based on the complexity of the file and transaction. Minimum fees start at $1500 and upwards.
6. Mortgage insurance fees
If your down payment is less than 20% of the purchase price, you will have to pay an insurance premium on that loan. This premium represents from 0.6% to 4.0% of the total amount of the mortgage. This premium is added to your monthly mortgage payment and is calculated by your mortgage broker. Keep in mind that this premium is taxed and this tax amount must be paid at the time of signing the deed of sale with the notary. A conventional mortgage (20% or more of a down payment) does not need to be insured.
7. Moving costs
The cost for a professional moving company averages between $90 to $145 an hour. The cost may be higher during peak season. You can also rent a truck and move yourself. Make sure you reserve the movers or your truck as soon as possible.
8. Condo fees
If you are buying a condo, all co-owners must pay monthly fees for the maintenance of common spaces, stairs, landscaping, snow removal, insurance, etc. You will be advised of these monthly condo fees prior to making an offer to purchase.
9. Transfer Tax or Welcome Tax
Commonly referred to as the "Welcome Tax", this tax applies in all municipalities for the transfer of title to property, whether for a house, condo, multi-plex or land. As mentioned in previous section, you will receive this invoice within 60 days of signing the deed of sale and have 30 days to pay it.
