12 Additional Costs You Need to Know When Buying a Home

The Canadian Mortgage and Housing Corporation lists these twelve additional costs as ones that you need to know when buying your new home.

  • Mortgage Loan Insurance Premium: If yours is a high-ratio mortgage (less than 20% down payment), your lender may need mortgage loan insurance. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing.
  • Appraisal Fee: Your mortgage lender may require that 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.
  • Deposit: This is part of your down payment and must be paid when you make an Offer to Purchase. The cost varies depending on the area, but it may be up to 5% of the purchase price.  In the Ottawa market, a 1% deposit is more typical. Your deposit is considered as part of your down payment.
  • Down Payment: With mortgage loan insurance from CMHC you can own your home with a minimum down payment of 5%. At least 20% of the purchase price is usually required for a conventional mortgage.
  • Prepaid Property Taxes and/or Utility Bills: To reimburse the vendor for prepaid costs such as property taxes, filling the oil tank and so on.
  • Home Inspection Fee: CMHC recommends that you make a home inspection a condition of your Offer to Purchase. A home inspection is a report on the condition of the home and generally costs around $500, depending on the complexities of the inspection. For example, it may be more costly to inspect a large home or one where issues such as moisture problems, pyrite, radon gas or urea-formaldehyde are suspected.
  • Land Registration Fees (sometimes called a Land Transfer Tax, Deed Registration Fee, Tariff or Property Purchases Tax): You may have to pay this provincial or municipal charge upon closing in some provinces and territories. The cost is a percentage of the property’s purchase price and may vary. Check with your lawyer/notary to see what the current rates are.
  • Property Insurance: The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing your home and its contents. Property insurance must be in place on closing day.
  • Survey or Certificate of Location Cost: While rare, 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. It can cost in the $1,000 to $2,000 range.
  • Water Tests: If the home has a well or in an older neighbourhood you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. You can negotiate these costs with the vendor and list them in your Offer to Purchase.
  • Legal Fees and Disbursements. Must be paid upon closing and cost a minimum of $500 (plus GST/HST).Your lawyer/notary will also bill you direct costs to check on the legal status of your property.
  • Title Insurance. Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property.

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