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15 Aug

Buying a Home: The Hidden Costs

General

Posted by: Krishna Menon

As a first-time buyer you need to gain knowledge before you can be ready to buy a home if you don’t want to miss out on the critical saving costs associated with your purchase. Just because you have the down payment minimum requirement and you’ve pre-approved doesn’t mean you’re ready to jump in with both feet just yet.

 

New homeowners can save on:

 

  • Appraisal costs
  • HST, on the purchase price
  • HST, CMHC premiums
  • Land transfer tax and rebates
  • Legal Fees

 

When purchasing a home in Ontario, you’ll be required to pay provincial tax to transfer the land of the new property you’ve bought. You may also need to pay land transfer tax to your municipality (the city you live in). Depending on the purchase price of the property, these amounts can vary.

 

All land transfer taxes are due upon the closing of your new home, but they are initially included in your down payment requirement. Your real estate lawyer will pay these amounts for you during the closing, so you don’t need to worry about them. What you do need to consider is the actual cost of these taxes. For instance, if you’re buying a home for $400,000 in the GTA, you could be looking at about $10,000 to cover these costs. We don’t want you to be caught off guard, so plan ahead.

 

Although $10,000 is a lot of money, what you might not know is that as a first-time homebuyer you may be able to recover up to half of this money back. You’re eligible for a land transfer tax rebate of up to $2,000 from the province of Ontario, as well as a land transfer tax rebate from the city or municipality of up to $3,725.

 

Setting Up Basic Accounts

For first-time buyers who are moving from a rental unit into a new home you’ll have to set up all of your new utility accounts at your new address before the move. With any new account comes account setup fees, and in some cases deposits. Some of the account you’ll need to set up are:

 

  • Homeowners’ insurance
  • Gas
  • Hydro
  • Oil
  • Water

 

New hydro accounts come with a mandatory set-up fee. Other companies such as gas companies charge deposits, however you may have the option to waive the deposit fee if you sign up for pre-authorized payments.

 

For all account set-up fees and deposits combined you could be looking at approximately $1,000 in additional costs within the first 30 days after the sale closes. To get an accurate estimate, we’d strongly encourage you to contact your service providers in advance. Also, don’t forget to inquire about alternative options for waiving deposit amounts.

 

Are you interested in learning more about your expected costs of your potential purchase, or seeking professional financial assistance? Our mortgage experts are available when you need someone you can trust. Save from day one and consult with us today.