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What does it cost to buy a house or condominium these days? Depending on which province and city you live in, mortgaging any kind of home can definitely run into the hundreds of thousands of dollars. And it’s not just the mortgage itself that costs money. When you’re buying a house or condo for the first time, the excitement of such an endeavor can make you forget about the numerous hidden expenses involved with any home purchase.

See our infographic: The Cost of Buying a House in Canada.

When you’re a homeowner, it’s important for you to create an effective budget and stick to it. That means factoring in every cost you might encounter, in the present and in the future. Groceries, your hydroelectric bills, car costs, etc. It all adds up somewhere. However, if you haven’t considered all the hidden costs of buying a house, don’t panic, because we’ve listed some of the most essential ones below!

To learn some of the pros and cons of buying a house vs. a condo, look here.

Housing Costs That You Might Not Have Considered

If you keep reading, you’ll we’ve provided you with a list of some of the most common, potentially unconsidered costs that come with buying a house or condo in Canada. For instance, “closing costs” refer to fees typically paid at the end of a real estate transaction, when a property is transferred from the seller to the buyer. These closing costs are typically paid only once and vary depending on your lender.

Here are some of the other hidden costs that a lot of homeowners don’t factor into their budget before they apply for a mortgage. Keep in mind that all of these fees depend on the property you’re buying and the agreement that you have with your lender.

Need to know how to enter the Canadian housing market? Click here.

Down Payment:

  • The initial amount you put down at the beginning of your first mortgage term, reducing the overall cost of the home. If you’re applying for a “conventional” mortgage, your down payment must be at least 20% of the home’s total value. If you’re applying for a “high-ratio” mortgage, your down payment is less than 20% but must be a minimum of 5%.

Trying to get a down payment for a house in Canada? Check this out.

Interest Costs:

  • During the life of your mortgage, you’ll be paying a certain amount per year toward the interest on your home. The interest fee you’ll be charged will be based on your lender’s specifications, what your credit status looks like if you’ve chosen a fixed-rate or variable rate mortgage, etc.

Want to know how to deal with rising interest rates in Canada? Read this.

Interest Adjustment:

  • The percentage of interest you’ll be charged between your first mortgage payment and your closing date.

Consider this if you’re shopping for low-interest rates.

Tax Costs:

  • Welcome taxes
  • School taxes
  • Land transfer taxes
  • Property taxes
  • Goods and services taxes (GST): if you buy or build a brand new home/condo
  • Harmonized sales taxes (HST): this depends on your province.

Can you buy a home if you owe taxes to the CRA? The answer is here.

Home Inspection Cost:

  • A proper home inspection by a licensed inspector is essential when you are about to purchase a home. It’s extremely important to be of aware of anything that might be wrong with the house before you decide to buy it.

Prepaid Property Taxes, Prepaid Condo Fees, and Prepaid Utilities:

  • If the person selling the property has prepaid any of these costs, you’ll have to reimburse them back for the amount they spent.

Moving Costs:

  • Hiring professional movers to help you transfer all your belongings and furniture from one home to another, while potentially expensive, can be a great help. At least the cost of the moving truck and the transfer of the heavy items (fridge, stove, washer/dryer, etc.) will be taken care of. On the other hand, if you want to save on moving costs, just hire your friends!

New Household Items/Furniture/Appliances:

  • While some houses and condos come furnished, who knows what the quality of those furnishings actually is? They may not be to your liking at all. In that case, you may need to purchase a new couch, dinner table, dishes, or television when trying to make your new dwelling liveable.

Legal/Notarial Costs:

  • During the home buying process, you’ll need to pay for the services of a lawyer or notary to review certain aspects of the contract and to perform various legal duties. Hiring a lawyer of any kind, even one that specializes in real estate, can cost a pretty penny.

Real Estate Agent Costs:

  • Hiring a real estate agent isn’t a necessary expense. However, they can definitely be beneficial to have on your side during the search for and purchase of any home. These agents are generally paid on a commission basis. They can help you find the right house for your needs, even negotiate with sellers for better prices. They can also make sure that those sellers are providing you with all the proper paperwork/warranties for any renovations, extensions, and repairs done on the home, so you know you’re getting a good, safe deal.

Renovation Costs:

  • True, your house or condo might not require any renovations or maintenance when you move in. However, renovating and/or repairing the various rooms or sections of your home can definitely boost its value, if and when you ever want to sell it, so it’s something to consider.

Financing a home renovation to care for your aging parents? Take a look at this.

Maintenance Costs:

  • Generally speaking, 3%-5% of your home’s value should be spent on the upkeep of the whole property. Some common maintenance issues include, but aren’t limited to replacing the windows, re-tiling/fixing the roof, installing a new hot water tank, adding new insulation, having the vents/furnace cleaned, etc.

Home/Property Insurance:

  • It’s extremely important to invest in property insurance to protect your home against any damages, including fires, floods, theft, storm/weather damage, etc.

Why is it important to insure your condo? Find out here.

Title Insurance:

  • This type of insurance protects you from problems that arise with encroachment issues (issues of intruding on other people’s property) and challenges to the ownership of the property. In other words, it acts as proof that you are the sole owner of the home.

Property Survey:

  • It’s also good to pay for a survey of the land that the home is situated on, which includes the measurements of the plot and positions of structures. This is also a more expensive alternative to title insurance.

Mortgage Life Insurance:

  • This insurance is optional but can certainly provide you with peace of mind, as it pays off all or a part of your mortgage if you or another owner of the property should pass away suddenly.

Mortgage Default Insurance / CMHC Insurance:

  • Mandatory in Canada for down payments between 5%-19.99%, this insurance protects the lender if a borrower defaults on their loan.

New Home Warranty Fee:

  • Insurance providers offer warranties on new properties to protect you against any repairs from building errors or structural defects.

Appraisal Costs:

  • When you’re about to buy a home or refinance your existing mortgage, you’ll need to hire an appraiser to review the property and confirm its market value.

Want to see our refinancing appraisal checklist? Click here.

Property Valuation Cost:

  • At some point, you may need to pay to have the property evaluated to determine it’s real or market value. This is similar to an appraisal but is usually much more thorough. A valuation is conducted for a property settlement, when trying to determine the value of a deceased estate, or when a court orders it as part of a property dispute.

Hook-Up Fees:

  • It costs a separate fee for every utility “hook up” that needs to be conducted, including but not limited to your cable/internet, phone, hydro, gas, oil, etc.

Estoppel Certificate:

  • This certificate usually concerns condo or strata (divided ownership) units. Signed between the tenant and the landlord, it acts as a form of documentation referring to the property’s financial well being and legal state.

Choosing The Right Mortgage

Whether you’re trying to enter the real estate market for the first time or you’re a seasoned professional, you’re number one goal should always be to find the right mortgage and best the lender. This will provide you with a solid foundation you need to be able to afford all the other costs associated with becoming a homeowner. Loans Canada can help match you with the right lender for your unique situation.

Bryan Daly avatar on Loans Canada
Bryan Daly

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

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