Budget beyond the mortgage payment when buying a home4 min read
The transaction itself involves various fees and then there are the costs of moving into and running a home
Few people will ever make a larger purchase than buying a home. This makes it easy to overlook the additional expenses that come with stepping into home ownership.
From covering costs needed before the move to needs once one takes possession, first-time buyers benefit from budgeting beyond mortgage payments.
Here is a look at some of the costs new home owners need to keep in mind, writes Josh Skapin:
While there is not a mandated commission structure for realtors, common practice is a model known as seven/three. This describes paying seven per cent on the first $100,000 of the home and three per cent on the balance, split evenly by the listing and buyer’s realtors.
A real estate lawyer is essential to several steps in one’s home purchase, including protecting the lender by ensuring the transfer of land is legally enforceable. A lawyer’s fees may vary depending on the complexity of the transaction but they are commonly $1,200 to $1,700, including disbursements.
Title transfer fee
In Alberta, a land title transfer fee is due once the deal is closed. It’s split into two components. According to Ratehub.ca, it’s $50 plus $2 for every $5,000 or portion thereof of the value of the land. Then on the mortgage, it’s $50 base plus $1.50 for every $5,000 or part thereof of the mortgage amount. RateHub.ca’s example uses a house of $300,000 with 20 per cent down payment resulting in a $240,000 mortgage. The total title transfer would cost $290. Note: Title transfer fee is different than a land transfer tax, which is usually thousands of dollars, and is charged in most provinces on real estate sales except for Alberta and Saskatchewan.
Loading and unloading all of one’s belongings to and from a rental van can take a toll. For this reason, some people prefer professional movers instead. Depending on the size of the home, costs can range from $500 to $2,000. Depending on size and time requirements, DIY movers may spend between $50 to $200 on a van or truck rental.
The size and location of the home, and coverage needs will influence the cost of home insurance. Albertans typically pay between $900 and more than $2,000 per year.
Calculated by multiplying the assessed value of one’s property by the current municipal and provincial tax rates, property taxes can be paid annually, or depending on the city, through a monthly instalment plan.
Shortly after moving in, it’s common to share photos of one’s new home over text, email, or social media. To do that, they’ll need their service provider to setup Internet and phone services. This commonly comes with a connection fee of about $50, depending on the provider.
Some new communities have a homeowners’ association and require annual fees that cover beautification, such as winter holiday light displays, and upkeep of amenities. This may include skating rinks, basketball courts, and lakes. These fees are sometimes connected to the style of home, with multi-family being the least expensive.
For homes that come with a yard, there will be the need to shovel snow off the walk and mow the lawn. Some may also want tools to look after a garden. Lawn mowers typically range from $200 to $600.