First Time Buyer

What to budget for?

Deposit. This is part of your down payment and must be paid within 24 hours upon acceptance of an Offer to Purchase. Deposits are usually around 1% but can be as high as 5% of the purchase price depending on the area. Sellers may request that the deposit be increased once all conditions have been satisfied.

Down Payment. At least 5% of the purchase price is usually required for a high-ratio mortgage and at least 20% of the purchase price is usually required for a conventional mortgage.

Mortgage Loan Insurance Premium. If yours is a high ratio mortgage (less than 20% down payment), you may need mortgage loan insurance. To get this insurance, you will be asked to pay the required insurance premium. Your lender may add the mortgage insurance premium to your mortgage or you can pay it in full upon closing. Mortgage loan insurance helps protects lenders against mortgage default, and enables consumers to purchase homes with a smaller down-payment — with interest rates comparable to those with a 20% downpayment.

CMHC Mortgage Loan Insurance. The amount of the premium varies and can range between 0.65% and 2.75% depending upon how much of the purchase price/home value is financed with a mortgage loan.

Appraisal Fee. Your mortgage lender may require the property be appraised at your expense. An appraisal is an estimate of the value of the home. The cost is usually between $250 and $350 and must be paid when you contract for those services. Some banks will waive this fee in return for your mortgage which is another reason to shop around.

Home Inspection Fee. A satisfactory home inspection is often an important condition of the Offer to Purchase. A home inspection is a report on the condition of the home and generally ranges around $500, depending on the complexities of the inspection. Larger or older homes may cost more, especially if there is any suspicion of latent defects.

Septic Inspection Fee. If the property has a septic, you will want to have the septic tank and bed inspected by a professional. Generally ranges from $500 and $600.

Mortgage Insurance. Protect your family and your home Buying a home is often the single largest purchase a person makes in their lifetime. But what would happen if you were to become critically ill, suffer an accident or die? Would your family be able to keep making the mortgage payments? Would they have to sell your home?

Land Transfer Tax. You have to pay this provincial tax upon closing. The cost is a percentage of the property’s purchase price and varies by province. First-time homebuyers may be eligible for a refund of all or part of the tax. How much is the refund? The maximum amount of the refund is $4,000.

Prepaid Property Taxes To reimburse the vendor for pre-paid costs (if any).

Property Insurance. The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing the structure of your home and its contents. Property insurance must be in place on closing day.

Survey or Certificate of Location Cost. The mortgage lender may ask for an up-to-date survey or certificate of location prior to finalizing the mortgage loan. If the seller does not have one or does not agree to get one, you will have to pay for it yourself.

Water Quality Inspection. If the property has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. This should be a condition on your Offer to Purchase.

Legal Fees and Disbursements. Must be paid upon closing and cost a minimum of $500 (plus GST).Your lawyer will also bill you for any disbursements they incur such as land titles costs to check on the legal status of the purchased property.

Title Insurance. Title insurance covers loss caused by defects of title to the property and may be recommended by your lawyer.

Home Buyers’ Plan (HBP). First time homebuyers may want to take advantage of the federal government’s Home Buyers’ Plan. Under this plan, you may use up to $25,000 of your RRSP towards the purchase of a home. The money is tax-free as long as you pay it back in the next 15 years. Ask your RE/MAX Sales Associate for details.

Costs After Possession

• Appliances. Check to see what comes with the house, if anything.
• Gardening equipment.
• Snow-clearing equipment.
• Window treatments. Check to see what comes with the house.
• Decorating materials. Paint, wallpaper, flooring and tools for redecorating.
• Hand tools. You will need some basic hand tools for your new home.
• Dehumidifier. May be required to control moisture levels, especially in older homes.
• Moving Expenses including van rental and boxes
• Service Hook-Up Fees. Charged for utilities. You may be required to pay a deposit for utilities such as telephone and heating services.
• Condominium Fees. You may have to make the initial payment for these monthly fees.
• Homeowner’s association fees. Some subdivisions have an annual or monthly fee to maintain recreation facilities.
• Repairs, upgrades, renovations. Depending on the condition of the home you buy, remember to budget for the work it will take to make it move-in ready.
• Household items. As a first time buyer you may need any number of household items such as trash cans and shower curtains.