Land Transfer Tax
When a home changes hands many province and a few municipalities charge a property transfer tax or title transfer fee. We are lucky NOT to have this extra tax in Alberta! Rates are usually on a scale of 0.5% to 2% of the home’s value and can add thousands to your purchase price.
Your lender may ask you to have a home appraisal to confirm its market value. Fees vary depending on a property’s value and complexity but are usually around $400.
A lawyer or notary will help protect your interest by reviewing your purchase agreement, searching the property title, and ensuring that all documents are completed properly. Basic legal fees stat between $500 - $800, plus disbursements, with added services, as needed.
An inspection can hep make you aware if issues related to a house’s structure and systems, such as plumbing and electrical, and recommended or necessary repairs. Fees range from about $350- $450.
Home & Fire Insurance
Your lender will require proof that property is insured in case of fire and other damages. Insurance costs vary, depending in the coverage needed, but budget for at least $500 a year.
Costs for Newly Constructed Homes
If you’re buying a brand-new home, be prepared to settle any items not quoted in the original price, including upgrades or paving and landscaping fees. New homes are also subject to 5% GST or HST if applicable in the province of sale. A federal rebate reduces the GST or the Federal part of HST to about 3.5% of homes valued at $350,000 or less.
If the seller has paid property tax, eater bills, or utilities in advance, you’ll need to reimburse these at closing. This can add hundreds to your upfront costs but means these bills will be paid for your first months in your new home.
Tax on Mortgage Insurance
If you have less than 20% down payments, your lender will require that you obtain mortgage default insurance. You can roll the costs into your mortgage payments, but the PST is due at closing. For example, if your mortgage insurance is $5,000 and the PST is 8%, you’ll pay $400.
Title insurance can safeguard you against fraud and problems with your property title or survey. Fees range from %150 - $350.
Before the big day, budget for all those last-minute things: $100 or more for van or truck rental or a few hundred form professional movers, $50 - $70 for a locksmith to re-key your locks and cleaning supplies. If you are moving into a building with elevators, potential fees for reserving the elevator and damage deposits may be required. Include miscellaneous expenses such as utility hook-up, redirecting mail, new appliances, tools, painting, decorating and cleaning supplies, window treatments, etc. Costs can vary significantly, but it's smart to set aside at least $1,000-$2,000 to cover the basics.
What you can afford to buy will come down to how much you can afford to spend every month to live in your home. And while mortgage principal and interest will represent a large portion of monthly costs, they are not the only ones. Remember to factor in your other monthly bills and expense when determining how much your monthly costs are.