Budget Beyond Mortgage Payment When Buying a Home

The transaction itself involves various fees and then there are the costs of moving in and running a house

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Few people will ever make a larger purchase than buying a home. This makes it easy to forget about the extra expenses that come with home ownership.

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From covering costs needed before moving to needs once one takes possession, first-time buyers benefit from budgeting beyond mortgage payments.

Here’s a look at some of the costs new homeowners should keep in mind, writes Josh Skapin:

Estate agent fees

Although there is no mandatory commission structure for real estate agents, common practice is a model known as a seven/three. This describes paying seven percent on the first $100,000 of the home and three percent on the balance, split equally between the advertiser and the buyer’s real estate agents.

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Legal fees

A real estate attorney is essential at several stages of buying a home, including protecting the lender by ensuring the transfer of land is legally enforceable. Attorney fees can vary depending on the complexity of the transaction, but are generally $1,200 to $1,700 including disbursements.

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Title Transfer Fee

In Alberta, a land title transfer fee is due once the transaction is complete. It is divided into two components. According to Ratehub.ca, it’s $50 plus $2 for every $5,000 or part of land value. Then on the mortgage, it’s $50 base plus $1.50 for every $5,000 or part thereof of the mortgage amount. The RateHub.ca example uses a $300,000 house with a 20% down payment, resulting in a mortgage of $240,000. The full title transfer would cost $290. Note: Title transfer fees are different from land transfer taxes, which typically run into the thousands of dollars, and are charged in most provinces on real estate sales, with the exception of Alberta and Saskatchewan.

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Movers

Loading and unloading all of one’s belongings to and from a rental van can have adverse consequences. For this reason, some people prefer professional movers instead. Depending on the size of the house, costs can range from $500 to $2,000. Depending on size and time requirements, do-it-yourself movers can spend between $50 and $200 on a van or truck rental.

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Assurance

The size and location of the home, as well as coverage needs will influence the cost of home insurance. Albertans typically pay between $900 and over $2,000 per year.

Property taxes

Calculated by multiplying the assessed value of your property by the municipal and provincial tax rates in effect, property taxes can be paid annually, or depending on the city, according to a monthly installment plan.

be connected

Shortly after moving in, it’s common to share photos of your new home via text, email, or social media. To do this, they will need their service provider to set up internet and phone services. This usually comes with a connection fee of around $50, depending on the provider.

Approvals

Some newer communities have a homeowners association and require annual fees that cover beautification, such as winter holiday light displays and maintenance of amenities. This can include ice rinks, basketball courts, and lakes. These fees are sometimes tied to the style of home, with the multi-family being the least expensive.

Maintenance requirements

For homes that come with a yard, it will be necessary to plow the driveway and mow the lawn. Some may also want tools to maintain a garden. Lawn mowers generally cost between $200 and $600.

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About Matthew R. Dailey

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