When it comes to buying your first or next Edmonton home, don’t let these additional expenses catch you off guard. Here are 14 hidden costs to prepare for on your new home purchase:
1. Mortgage Penalties
Unless you plan on porting your mortgage or blending and extending, you’ll likely need to break your mortgage contract. As a result, you may need to pay a prepayment penalty, which will vary according to your contract terms. Be sure to consult your current lender in advance.
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2. Mortgage Loan Insurance
Any down payment on a home in Canada less than 20% will require mandatory mortgage loan insurance. While you will need a minimum down payment of at least 5%, keep in mind, the more you put down, the more affordable your mortgage insurance premiums will be.
3. Home Inspection
While home inspections aren’t mandatory, they’re recommended. The extra investment of a few hundred dollars can save you potentially thousands down the road, should there be any unforeseen problems with the home.
4. Property Appraisal
The lender typically requires a home appraisal to verify the property’s market value (this helps them determine if the home is actually worth what you’re requesting as a mortgage loan). Note: This fee may be at your expense or waived, depending on the lender.
5. Title Insurance
Your lender may also ask that you purchase title insurance, which protects both you and them from any issues that may crop up regarding the property’s ownership (i.e. easements, builder liens, non-compliance issues).
6. Land Survey / Real Property Report
A Real Property Report (RPR) is an official document prepared by a land surveyor outlining a property’s structures (i.e. the home, garage, deck, fence, shed, etc.) and boundaries. This lets both you and the lender know exactly what you’re purchasing.
Note: Note: In most instances, the RPR will be provided by the seller. If you are required to pay for a new RPR as a buyer, be sure to keep a copy for your records so it may easily be provided when and if you decide to list the home in the future.
7. Legal Fees
As a home buyer, you will need to partner with an experienced real estate lawyer who will oversee your purchase contract and take care of any legal details surrounding the transaction. If you don’t already have a lawyer, your Edmonton REALTOR® will help you find one.
8. Home Insurance
As a condition of your mortgage loan, your lender will ask you to provide proof of home insurance. This type of insurance guarantees your home will be protected from damages related to flood, fire, theft, inclement weather, etc.
9. Mortgage Life Insurance
Some home buyers opt to purchase mortgage life insurance as a means of protecting both their loved ones and their investment. This type of insurance ensures all or part of your mortgage will be covered in the event of critical illness, job loss or death.
10. Property Taxes
Depending on your closing date, you may be required to reimburse the previous owner for any property taxes paid prior to you taking over. These will be prorated from closing day onward.
11. Estoppel Certificate and Condo Fees
If you’re purchasing a condo, you’ll likely need to pay for an estoppel certificate as well as any monthly condo fees upfront (here too, you may need to reimburse the seller for any condo fees they’ve paid after the closing date).
12. Moving Costs
While you may be able to recruit friends and family to help you move, when it comes to larger items (such as appliances and furniture), you may have to hire a professional moving company (or at least rent a moving truck). These costs will vary depending on how many items you need to move and the distance to your new home.
13. Utilities
These may include miscellaneous hook-up fees for your phone, cable and internet as well as gas, hydro, electric and other necessary utilities.
14. Maintenance and Repairs
Depending on the outcome of your home inspection, you and your Edmonton REALTOR® may have negotiated any repair costs with the seller. Moving forward, however, you’ll want to set aside at least 3% to 5% of the home’s overall purchase price to cover annual maintenance costs.
Are you thinking about buying a home in Edmonton? Take advantage of these top Home Buyer Tips, or feel free to get in touch!
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