To make sure there are no surprises, you need to understand all the costs involved before you start budgeting.
Here are the top 10 costs you'll likely encounter when buying a home:
1- Down payment
The down payment is the amount of money you must pay at the time of purchasing your home. It represents a portion of the total cost of your property and is generally at least 5% of the property's value.
In Quebec, you'll typically need a down payment of 5% for homes under $500,000 and 10% for more expensive properties, although these requirements can vary.
Be aware that if your down payment is below 20% of the purchase price, mortgage default insurance is mandatory.
2- Inspection
It's always a good idea to have a professional inspector check out any property you're thinking of buying. This can help identify any issues that need fixing and save you from problems down the road.
The cost of a home inspection can vary based on factors like the home's size and how complex the inspection is. Expect to pay around $500 or more for a certified inspector.
3- The notary
Notary fees cover the legal costs of buying your home, including preparing and signing the necessary documents.
When buying a home in Quebec, you must use a notary to complete the transaction. The buyer's costs for the notary's services generally fall between $1,500 and $3,000.
4- Home insurance
You're required to have home insurance when you buy a property. It protects your home and your mortgage from losses caused by unforeseen events.
When it comes to home insurance, there are two main types: basic coverage and all-risk coverage. The key difference is the level of protection each offers.
Basic coverage protects your home from common risks like fire, water damage, theft, and vandalism. You'll be covered for losses caused by these specific events.
All-risk coverage offers more extensive protection than basic coverage. It covers not only the standard risks like fire and theft, but also accidental damage and losses to your personal belongings.
All-risk insurance typically costs more than basic coverage due to the expanded protection it offers. It's worth shopping around and comparing quotes.
5- The moving process
Moving costs can add up, especially if you're moving a long distance or have a lot of belongings. It's important to plan for these expenses.
When moving, you'll need to budget for things like a rental truck, labor, mileage, insurance, and possibly storage.
If you're moving for work or school, you may be able to claim a tax deduction for your moving expenses.
6- Welcome tax
When you buy a property, you'll need to pay a tax called the "welcome tax", which goes to the provincial or municipal government.
The welcome tax is a percentage of the property's value and varies by municipality. It's usually between 0.5% and 2% of the purchase price and is paid when you sign the deed at the notary's office.
7- Home renovations
If you plan to make renovations or improvements to the property, you will need to factor these costs into your budget. Renovation costs can vary widely depending on the type of renovation you want to undertake. The possibilities are limited only by your imagination!
In some cases, the renovations carried out could contribute to better energy efficiency of your home in addition to having a significant impact on its value.
8- Annual property expenses
Every year, there are ongoing costs associated with owning a home. These include:
- Taxes, including municipal and school taxes;
- Utility costs, including electricity, gas, and water;
- Condo fees, if you own a condominium;
- Services, such as internet, cable, and snow removal;
- Etc.
These costs can vary widely depending on the city and the home's value.
9- Home maintenance
Maintaining your property well is crucial to preserving its full resale value. Repairs and maintenance of the roof, windows, doors, walls, and floors should not be neglected.
Expect additional costs for outdoor upkeep, including mowing, trimming, cleaning, and leaf removal.
10- Home valuation
The valuation of your property is important to determine its real value. It is used to define the market value of the house and serves as a starting point for obtaining a mortgage.
The cost of an appraisal can vary, typically starting at a few hundred dollars and going up to over $1,000 for larger properties.
Does your financial institution require it as a condition of your mortgage financing? The costs could then be included directly in your financing agreement. In that case, you would not have any additional costs to pay.
