When it comes to buying and owning a home, there are many costs to consider. More than just the purchase price, there are many additional costs that will come up during the purchase and throughout owning your home. This guide will give you all the necessary info on how much it costs to buy and own a home in Canada.
Cost Breakdown: Buying A Home
You’ve searched high and low to find the perfect space you’ll call home. You’ve saved diligently, and now you’re ready to take the next step in your homeownership journey. In general, you can expect to pay around 1.5% - 4% of the purchase price of your property in closing costs. Here are some costs you’ll want to be prepared for.
Down Payment |
Down PaymentYour down payment will make up the biggest chunk of your funds when buying a home. The amount of your down payment will vary depending on the purchase price of your home, with the minimum ranging between 5% to 20% of the purchase price.
Here’s how much the minimum down payment would be on a $600,000 home: |
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Home Inspection |
Home InspectionWhile they’re not mandatory or required, a home inspection will provide detailed insights into the home you’re looking to purchase and can give you peace of mind that you’re making a good investment. A professional home inspector will identify any potential issues with the home’s structure or condition. Home inspections will usually take anywhere from 3 to 5 hours. |
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Legal Fees |
Legal FeesYour lawyer will be an important part of your home-buying team! From registering the property and reviewing contracts to releasing funds on the day of closing there’s a lot that goes on behind the scenes that your lawyer will make sure happens seamlessly. |
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Title Insurance |
Title InsuranceIn legal terms, “title” refers to the right of ownership to land. Title insurance ensures that homeowners are covered in case of issues like title defects, zoning discrepancies, fraud or forgery. Title insurance is a one-time cost, and it varies depending on factors such as the value of your home, location and your insurance provider. |
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Land Transfer Tax |
Land Transfer TaxThe Land Transfer Tax is a tax that is paid to the province when ownership of property is transferred from one owner to another. All provinces and territories have a Land Transfer Tax, but it may be called something different. In Alberta, it’s called a Title Transfer Fee, and in Saskatchewan, it’s referred to as a Land Transfer Fee. The amount of the land transfer tax varies by location. In some cases, first-time homebuyers or those buying newly built homes will receive a rebate or exemption on the tax. |
Cost Breakdown: Owning A Home
In addition to your regular mortgage payments, there are some extra costs you’ll want to budget for. Here are some additional costs associated with owning a home.
Property Taxes |
Property TaxesProperty tax is a recurring fee that Canadian homeowners pay to their municipalities to pay for essential community services. The amount you’ll pay in property tax varies depending on where you live, but it is dependent on the assessed value of your property and your municipality’s property tax rate. In most areas, homeowners will receive an interim tax bill and a final tax bill, but the payment frequency and dates can usually be personalized to suit what works best for you financially. For example, some homeowners may prefer to make two lump sum payments while others will opt for monthly payments. Find out how MCAP makes paying your property taxes easy with our Property Tax Service! Cost: 0.28% to 2.64% of the assessed value of your property
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Utilities |
UtilitiesThis area covers all the aspects that ensure your household functions properly and is a comfortable space for you to live, like electricity, water, internet, and gas. Of course, the costs will vary greatly depending on where you live in the country. Someone living where there is a mild climate won’t spend nearly as much to heat their home as someone in the northern areas of the country. |
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Home Insurance |
Home InsuranceYour lender will usually request proof of home insurance before advancing any funds on closing day, but the actual payments will begin once you have purchased your home. Home insurance covers the cost of replacing your home and any contents if something were to happen. When it comes to home insurance there is a wide range of what you can expect to pay as there are many factors that influence the cost, like your location and the age or condition of your home. |
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Maintenance & Repairs |
Maintenance & RepairsHome maintenance and repairs are areas you can never be too well prepared for. You may not be able to predict exactly when you will need to replace an appliance or do major home maintenance, but budgeting for these expenses in advance will make owning a home less stressful. The amount you’ll need for this category will depend on the age and condition of your home but there are two common strategies used to save for home maintenance needs.
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Other Costs You May Encounter
Appraisal Fee
A home appraisal is completed by a licensed third party to provide an estimate of the market value of a home. Lenders will need an appraisal to be completed before providing homeowners with a mortgage.
Cost: $300 to $500
Deposit
When you’ve found a home you’d like to purchase, it’s not uncommon to make a deposit with your offer. Although this step is not mandatory, it demonstrates to the sellers that you’re serious about your intentions to buy the property. Keep in mind that the deposit amount will need to be provided to the seller’s realtor quickly, in as short as 24 hours or up to 5 business days, so make sure the money is readily available.
Cost: 1% to 5% of the purchase price
Mortgage Loan Insurance Premiums
If your down payment amount is less than 20% of the purchase price of your home, you will need Mortgage Loan Insurance. This insurance protects lenders in the case where a homeowner is unable to make their mortgage payments. The premium amount will depend on the Loan-to-Value ratio, how much your home is worth in relation to your mortgage amount. The premiums can be paid upfront in a lump sum or blended in with your mortgage payments.
Cost: 0.60% to 4.00% of the total loan value
Status/Estoppel Certificate Fee
For those looking to purchase a condo, an estoppel certificate is used to verify that the seller doesn’t owe the condo corporation any money. It helps protect buyers from acquiring any debts they may be unaware of. The seller of the property will usually pay for the estoppel certificate through their lawyer. This fee is not applicable in Quebec.
Cost: $200 to $350
Land Registration Fee
When a purchase is finalized, there are various closing costs associated with the process of registering the sale of the land, such as Registration of Deed of Transfer, Registration of Mortgage and The Municipal Land Transfer Tax Processing Fee. The cost for each will vary depending on where you are.
Cost: $200 to $260
Survey or Certificate of Location
A certificate of location or land survey is valuable when you’re buying a property. It is a legal document drafted by a land surveyor that includes a report and a plan of the property you’re buying outlining the size, extent and boundaries of the property. A land survey is not legally required in most provinces or territories, but it may be requested by buyers or lenders.
Cost: $1,500 to $6,000
Whether you’re a first-time homebuyer or someone looking for the next place to call home, having an idea of the costs associated with buying and owning a home will help along your journey. Having a knowledgeable mortgage broker can help make the process even easier. Use our Find a Mortgage Broker Tool to find a broker near you.
