Beyond the typical costs of buying a house, many other expenses are associated with homeownership. Find out what these ongoing monthly costs of owning a house in Ontario are so you can budget accordingly. That way, you can be sure that you’re not spending more than your finances can handle.
What Is The Average Monthly Housing Cost In Ontario?
Given the average costs of various expenses listed below, the average homeowner in Ontario could spend close to $4,200 a month. Keep in mind that these figures could be much different than your specific situation.
As a general rule, you shouldn’t spend more than 39% of your gross monthly income on housing costs. Keeping your expenses under this threshold will help you avoid becoming “house poor” and protect your financial health.
Monthly Costs Of Owning A House In Ontario
On top of the costs associated with buying a home, there are several ongoing expenses that you’ll need to cover as a homeowner in Ontario, including the following:
Mortgage Payments
According to the Canada Mortgage and Housing Corporation (CMHC), the average monthly mortgage payment in Ontario is $2,770.
Home Insurance
The average cost of home insurance in Ontario is roughly $1,250 per year, which comes to a little more than $104 per month. That said, the amount you pay can be much higher than this, depending on the following:
- Where your home is located
- The value and age of your home
- Your home’s contents
- Type of heating (ie. gas versus wood-burning fireplace)
- Your insurance claims history
- Your home’s proximity to a fire hydrant/fire hall
You’ll need to consult with an insurance broker to find out exactly how much you can expect to pay in home insurance.
Energy And Utility Bills
As a homeowner, you’ll have multiple utility and energy bills to pay including internet, cable, and home phone. Homeowners in Ontario pay around $147 per month to have their utilities set up.
Other bills to consider are energy bills such as hydro electricity and gas. Home energy spending in Ontario varies across the province as a result of differences in:
- Energy sources used
- Household income
- Cost of energy distribution to the region
- Location
- Service provider
That said, the average household in Ontario spends roughly $2,128 per year on home energy, according to the Financial Accountability Office of Ontario, which works out to about $177 per month. The amount of energy you use and the features of your home will ultimately determine how much you will pay per month in energy bills.
Water Bills
Average water bills in Ontario cost roughly $90 per month, which adds up to nearly $1,100 per year. Homeowners may be able to save money on their water bills, however, thanks to the Ontario Trillium Benefit. This tax-free benefit is meant to help alleviate the high costs of energy bills and certain taxes. Eligible low- to moderate-income residents of Ontario can receive anywhere from $172 to $265 per month through the OTB, based on income and family status.
For renters, the cost of water may or may not be included in the rent price, depending on the location. Renters typically pay for water if the place they’re renting is not a condo.
Water Heater Tank Rental
The price you pay for renting your hot water tank depends on a few things, like its capacity, type, brand, and energy efficiency level. That said, you can expect to pay anywhere from $20 to $50 per month.
If you’re a homeowner, keep in mind that water heater rental companies may use tactics to convince you that renting your hot water tank is better than owning. This way, they can lure you into an ongoing contract that requires you to pay rent for the tank every month. You can be locked into these contracts for years and may be subject to regular increases in rental rates.
If you choose to rent your hot water tank, be sure to include this added cost to your monthly budget. But before you sign an agreement, make sure to weigh the costs of owning versus renting your water tank.
Condo Fees
If you’re part of a homeowners association (HOA) or condo association, you may have to pay a monthly fee to them. HOA fees are used to pay for services in the community such as lawn care, snow removal or repairs of common areas.
Condo fees in Ontario average $0.58 per square foot. For example, a 1,000-square-foot condo would cost about $580 per month. Some condos include utilities in the condo fees. Make sure you understand what your condo fees cover.
Other Costs Of Owning A House In Ontario
The recurring costs mentioned above are not the only expenses you would need to cover to operate and maintain a home in Ontario. Other costs that you need to budget for include the following:
Property Taxes
Each municipality in Ontario has a property tax rate, which is applied to the assessed value of your property. Depending on where your home’s location and its size, you could spend anywhere from under $2,000 to well over $10,000.
Maintenance Costs
It’s recommended that homeowners budget about 1% of their property value per year to cover maintenance and repair costs. If your home is valued at $750,000, consider setting aside around $7,500 per year to maintain and upkeep your home. Keep in mind that some years may be more expensive than others if major repairs are required.
The following are the types of maintenance costs you’ll encounter:
- HVAC
- Plumbing
- Electrical
- Roofing
- Landscaping
- Foundation
- Gutters
- Paint
Renovations And Upgrades
While not necessary, you may consider updating your home to suit your tastes and changing styles. Renovating and upgrading your home is also a good idea to ensure you maintain its value. There are several upgrades and renovation projects you may consider, including the following:
- Energy-efficient upgrades
- Appliance upgrades
- Room upgrades
- Room or floor additions
- Basement finishing
- Paint job
- New deck or patio
- Garage remodelling
- Upgraded lighting
- Door replacement
- Crown molding
- Floor refinishing
- Cabinet replacement
This list is by no means exhaustive, and the costs can range substantially. Depending on the type of project and its scope, you could spend a few thousand or even tens of thousands of dollars (or more) to complete any of these projects.
Before you renovate your home, consider the return on investment. In other words, make sure the cost is worth the value it adds to your home. Some projects bring in a higher ROI than others. Make sure you’re not spending more than what you may be able to recoup if you sell at some point.
Do You Pay HST On A House?
In Ontario, HST is only charged on homes sold by builders. So, new homes are charged HST on top of the purchase price, though builders typically roll that fee into the purchase price. Existing homes are not typically charged HST because the owner is not a builder.
The total HST in Ontario is 13%, which is made up of 8% PST and 5% GST. For example, a new home that costs $800,000 would be charged $104,000 in HST.
Fortunately, eligible Ontario home buyers may qualify for the HST New Housing Rebate to recoup the cost of HST paid on a new home purchase. The most you may get back if you’re eligible for this rebate is $24,000 if the tax was paid on the purchase of the land, and up to $16,080 if it was not.
Bottom Line
These expenses might seem daunting, but they’re the normal set of expenses that come with homeownership and illustrate why budgeting is so important. Familiarize yourself with these costs so you can ensure that the home you buy is affordable for you.
