As we come into more challenging times financially, with needing two bags of chips to satisfy a craving due to ‘shrinkflation’ – who knew our chips would take such a crunch with rising inflation.
I’d like to discuss preparing for the costs associated with owning a home. Many of us have spent many years saving for our down payment, imagining what this moment will be like – where will it be, how will I decorate it, will it be for me or a plus one or maybe two or three?
Well now, you’ve made reached the stage – where you are ready to start looking – or you’ve already started. Buying has many additional costs in addition to the down payment, closing costs & moving expenses which we will go through below you also have to prepare for the unexpected or future expected.
One of the many benefits of coming into a balanced market and leaning towards a buyer’s market – is that you have: more options, time to process the decision, negotiation power, the ability to complete an inspection and appraisal and further negotiate following your due diligence. All of which are putting you in a better position to make an informed decision on the biggest investment of your life to date.
I’ve prepared the below checklist of expected expenses for your upcoming homeownership journey so the costs don’t catch you by surprise.
Costs to prepare for when buying a home:
- Legal Fees (1800-2500)
- Inspection (300-800)
- Appraisal (250-700)
- Title Insurance (200-500)
- Land Transfer Costs (vary by province/territory) – reach out for the specifics in your area
- Moving Costs
- Insurance
- Move In Fees (Strata Units)
- Property Taxes (depending on time of year you by you can look at paying by lump sum or in monthly increments)
- Furniture, Cleaning Supplies, Packing Supplies
- GST (on new homes or others)
Now we’ve discussed the costs associated with the time of buying you may incur it’s important to also be prepared for upcoming costs. Items that will arise in terms of reviewing the strata documents – on stratified homes – with upcoming work, special levies, or planned strata fee increases. If you are buying a freehold property – being prepared for maintenance – including snow removal, landscaping, lawn care or garbage disposal depending on the services provided in your community. If you are on a well or septic ensuring they are properly serviced and cared for. When having your home inspected – the inspector will speak with you in relation to life expectancy on key items such as appliances, electrical, plumbing and more – to gauge what costs may arise immediately and within 6, 12, 24 or 36 months of ownership and beyond. Investigate quotes, costs and ensure you have a plan to set those funds aside or speak with your mortgage professional about setting up a re-advanceable mortgage product to prepare for the unexpected and have a fall back if something with a high-ticket cost that needs immediate repair can be replaced without a large impact on your budget.
My recommendation to my clients, family and friends alike – is to always ensure you are setting aside a comfortable amount as a safety net for repairs/replacement of materials and appliances, upcoming renovations, and emergencies in addition to your savings.
What I would recommend you do is:
- Determine your comfort level to spend monthly on your home
- Inclusive of your previous, rent, utilities, internet etc.
- Figure out potential additional set aside funds: depending on the type of dwelling, repair costs, location, and anticipated costs for upgrades/repairs. Let’s say $5,000 anticipated a year you’d need $416 a month
- How much do you want to save a monthly budget in addition to your home
- How much you have saved – for purchasing (down payment, closing costs & any immediate repairs/funds to set aside)
Once you’ve sorted these figures out – set up a time to speak with your Mortgage Professional – to figure out based on your comfort with monthly expenses and comfort level for savings/expenses to carve out your budget and comfort purchase range based on your own comfort level, income, and goals.
If you need help with building this and want to set up a call to connect, I would be happy too.
Yours truly,
Catherine Ellis
