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How Much will it Really Cost?
Once you have figured out the home price range you can afford
and the type of mortgage you qualify for, you will need to calculate
all of the associated costs of the transaction to make sure
you are financially ready.
Up-Front Costs
You will need to plan ahead to cover the many up-front costs
of buying a home. Timing is important to help make sure things
go smoothly.
- Mortgage Loan Insurance Application Fee and Premium.
If yours is a highratio mortgage (less than 25% down payment),
you may need mortgage loan insurance. To get this insurance,
you may be asked to pay the required application fee. Your
lender may add the mortgage insurance premium to your mortgage
or ask you to pay it in full upon closing.
- Appraisal Fee. Your mortgage lender may
require that the property be appraised at your expense. An
appraisal is an estimate of the value of the home. The cost
is usually between $250 and $350 and must be paid when you
contract for those services.
- Deposit. This is part of your down payment
and must be paid when you make an Offer to Purchase. The cost
varies depending on the area, but it may be up to 5% of the
purchase price. If you wish to make a down payment of 5% and
you give a deposit of 5%, then your down payment is considered
to be made.
- Down Payment. At least 5% of the purchase
price is usually required for a high-ratio mortgage and at
least 25% of the purchase price is usually required for a
conventional mortgage.
- Estoppel Certificate Fee (not applicable in Quebec).
This applies if you are buying a condominium or strata unit
and could cost up to $100.
- Home Inspection Fee. Remember that this
may be a condition of your Offer to Purchase. A home inspection
is a report on the condition of the home and may cost over
$200, depending on the complexities of the inspection. For
example, it may be more costly to inspect a home that has
large square footage, one that is expensive or one where contaminants
such as pyrite, radon gas or urea-formaldehyde are suspected.
- Land Registration Fees (sometimes called
a Land Transfer Tax, Deed Registration Fee, Tariff or Property
Purchases Tax).You may have to pay this provincial or municipal
charge upon closing in some provinces. The cost is a percentage
of the property's purchase price and may vary. Check with
your lawyer/notary to see what the current rates are.
- Prepaid Property Taxes and/or Utility Bills. To
reimburse the vendor for pre-paid costs such as property taxes,
filling the oil tank, etc.
- Property Insurance. The mortgage lender
requires this because the home is security for the mortgage.
This insurance covers the cost of replacing the structure
of your home and its contents. Property insurance must be
in place on closing day.
- Survey or Certificate of Location Cost.
The mortgage lender may ask for an up-to-date survey or certificate
of location prior to finalizing the mortgage loan. If the
seller does not have one or does not agree to get one, you
will have to pay for it yourself. It can cost in the $1,000
to $2,000 range.
- Water Quality Inspection. If the home
has a well, you will want to have the quality of the water
tested to ensure that the water supply is adequate and the
water is potable. You can negotiate these costs with the vendor
and list them in your Offer to Purchase.
- Legal Fees and Disbursements. Must be
paid upon closing and cost a minimum of $500 (plus GST/HST).Your
lawyer/notary will also bill you direct costs to check on
the legal status of your property.
- Title Insurance. Your lender or lawyer/notary
may suggest title insurance to cover loss caused by defects
of title to the property.
If you feel you cannot cover all of the up-front costs, you
can ask your lender for a loan. Remember that payment for this
loan amount, based on a 12-month repayment period, will have
to be included in your Total Debt Service ratio calculation.
Other Costs
Besides up-front costs, there are other expenses to consider:
- Appliances. Check to see what comes with the house, if anything.
- Gardening equipment.
- Snow-clearing equipment.
- Window treatments. Check to see what comes with the house.
- Decorating materials. Paint, wallpaper, flooring and tools
for redecorating.
- Hand tools. You will need some basic hand tools for your
new home.
- Dehumidifier. May be required to control moisture levels,
especially in older homes.
- Moving Expenses.
- Renovations or Repairs.
- Service Hook-Up Fees. Charged for utilities. You may be
required to pay a deposit for utilities such as telephone
and heating services.
- Condominium Fees. You may have to make the initial payment
for these monthly fees.
Ottawa Home Buyers Guide
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