When purchasing a property, there are many expenses over and above the purchase price that you will need to consider. You do not want these additional costs to take you by surprise at the signing of the deed of sale, therefore it is best to be well informed and prepared to deal with them.
Some of these costs are to be paid only once, while others might be on a monthly or annual basis, and are over and above the ones you expected to pay. All these costs do not apply to all situations but it’s better to know what they are ahead of time in order to prepare a realistic and complete budget.
Remember that buying a property will probably be one of the biggest investments that you will make and could very well be the central point of your financial net worth.
Whether it’s your first, second or tenth house, several details must be considered all along the process.
Read the list of the following items carefully and make sure you include everything in your budget while planning the purchase of a property.
- Evaluation fees: The lending institution will probably ask for the property evaluation of the property that you wish to buy and you may have to pay these fees.
- Taxes: According to the amount of cash you will put down, the lending institution might decide to add the amount of property taxes (municipal and school) to your mortgage payment.
- Land surveying fees: When you buy an existing house (as opposed to a new one), the bank can require an updated version of the certificate of location. If your offer to purchase did not already include it as being the responsibility of the seller, you will may have to absorb these cost.
- Insurance for the property: Home insurance covers the reconstruction of the property (replacement value) in case of destruction and covers the contents (theft and fire). Your lending institution will require proof of insurance before releasing the funds for the at the time of the notarial signing of the property transfer.
- Legal fees: Even the simplest transaction must be duly signed at the notary and registered with the Land Registry. inquire about the fees charged by various notaries. Costs will vary based on the complexity of the file and the services offered by the notary.
- Mortgage insurance fees: If you do not deposit the required minimum amount in cash to get a “conventional” loan from the bank you will have to pay an insurance premium. This premium represents from 0.5% to 3.5% of the total amount of the mortgage. Payments of the premium are usually added to your monthly payment.
- Mortgage brokerage fees: A mortgage broker has the right to require to be compensated for analyzing various offers from lending institutions. However, it is important to “shop” since many brokers will offer this service for free because they are compensated by the lending institution.
- Moving fees: The costs of professional moving companies average between $80 to $125 an hour for the truck and 3 men. The cost increases from 10 to 20% during the 1st of July period. If you plan to move over 40km away to your full-time or part time employment, remember that you may be able to deduct your moving fees form your income tax return.
- Condo fees: The co-owners must pay monthly fees for the maintenance of common spaces, stairs, landscaping, snow removal, etc. These costs vary according to the property and the decisions of the co-property syndicate.
- Infrastructures: It is important to know if a special tax relating to exceptional infrastructure expenses (sidewalks, aqueduct, sewers, paving) will apply to the property you’re interested in buying. These infrastructure fees might amount to thousands of dollars in addition to municipal taxes for a predetermined number of years.
- Transfer tax and others: This tax applies evenly in all municipalities for the transfer of title to property. Commonly referred to as a “welcome tax”, it must be paid within three months of the signature. In some municipalities and in some circumstances, a “green tax” can apply for an important expansion requiring a new cadastre.