Extra Costs and Budgeting When Buying a New Home

May 5, 2017


With eyes wide open, you have huge goals with a future so bright you’ll have to wear shades. You’re almost done paying off the student loans and managed to squirrel away a few bucks after that last bonus. With your next raise on the horizon, you are beginning to think about the logical next step = buying a home.

Buying a home can be an exciting time in your life, but can also be a strain on cash flow. You know about the down payment but you’ve discovered there are other ‘behind the scene’ costs you didn’t anticipate.

Not to worry, here’s a list that will shed some light on the real cost of buying a home.

10 “extra” expenses to prepare for when buying your first house

1) Appraisal

Often your lender will require an appraisal of the home you wish to purchase. They do this to validate the home is worth the amount you are asking them to finance. A residential appraisal can range between $200-500

2) Home Inspection

Before you sign on the dotted line, it’s worth the investment of a home inspection. This due diligence can uncover any potential issues that may cost you thousands in repairs later and provide you peace of mind after the sale is final. Home inspections typically cost $400-500


3) Property Survey / Title Insurance

A survey sometimes may be necessary in determining the property boundaries associated with the home you wish to buy. This can clarify where you (or your neighbours) can place outbuildings or fences in the future. In some cases, title insurance, can be purchased as a suitable alternative to a survey. Your best course of action is to verify with your real estate lawyer which is best for your situation. While surveys can cost approx. $1,000, title insurance usually costs $250


4) Land Transfer Tax (if applicable)

This tax is paid by the purchaser of a property when the title changes hands in most provinces. While the cost is a percentage of the purchase price, the rates vary from province to province and in some cases municipality as well

5) Closing Cost

This is a common term used meaning Legal Fees. This service is a standard offering of most law firms and cost can vary from $1000-$2500. Be sure to get a couple quotes that clearly outline what specific expenses will be on that invoice. Items such as title insurance may already be listed on the quote

6) Mortgage Insurance

If you have less then 20% down payment you may have to pay a one-time mortgage default premium that can range between 0.5-2.75% of the principle mortgage amount. This can be paid to the lender before closing, or often added to the principle amount of the mortgage

7) Interest Adjustments

Occasionally there may be a time lapse between your closing date and your first mortgage payment. You will be required to pay any interest adjustments along with that first payment. This can be avoided simply by scheduling your first payment exactly on schedule with your closing date

8) Tax & Utility Adjustments

Any portion of property taxes or utilities that was already prepaid by the vendor will need to be pro-rated and reimbursed. This is usually determined by your lawyer at closing


9) Home Insurance

You will be required to have adequate replacement cost coverage on the house and contents. Home insurance can vary, but $450-700 is an average range



Now that all the stress of moving, paying all the expenses and settling in is over, it’s time to splurge on the champagne and celebrate the next chapter with your friends and loved ones!

CONGRATS on your new home when it happens! If you’re looking for a home insurance quote you can use our online Rate Reducer to compare prices in minutes!