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The Hidden Costs Of Owning A Home You May Not Know About

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Buying a new home can be one of the most exciting, but also one of the most stressful experiences of your life.

There are so many things to think about, and it can become a bit overwhelming. Sometimes, buying or selling a home can take several months, depending on if you are stuck in a chain that doesn’t seem to be moving.

It’s always a good idea to try and write down everything that you need to do, or to pay for, so that you know where you stand.

However, there are bound to be some things that you forget about, or simply don’t know about. 

Let’s have a look at some of the hidden costs of home ownership, that you may not be aware of.

Home Insurance

We need insurance for everything these days, from life insurance, to pet insurance, from health insurance to car insurance, and when you are buying a home, you also need home insurance.

There are so many types of insurance available to you, it can become very confusing, so your best bet is to enlist the services of an insurance broker, who will be able to find you the best suited insurance, depending on your situation and your budget.

Home insurance premiums are very variable, and will depend on many factors, such as the location and age of your house, or if there have been any claims previously.

Mortgage Insurance

When you decide on a mortgage lender, they will expect a certain percentage of the house value to be laid down as a downpayment, this is normally between 15 – 20%, however if you are unable to reach this figure, then you will need mortgage insurance.

Yes, this is another insurance that will have to consider, and one that your lender will insist on if they think that you may be a risk to lend money to.

Mortgage insurance gives peace of mind to the lender, that should you default on a mortgage payment, then they will still get their money.

The amount that you are laying down as a down payment will set the amount that you have to pay as mortgage insurance, and it will be a percentage of the value of your home. Mortgage insurance can either be paid upfront, or it can be added on to your monthly repayments.

It can be difficult to know whether buying or renting a house is the right option for you, as there are significant costs involved, either way, Richard Morrison Vancouver Homes explores this subject in more depth.

Home Inspection

No matter what kind of house you are buying, be it a newly built house, or one that is several decades old, it should always be inspected by a professional house inspector.

Even if you are buying the house from someone you know and trust, it cannot be stressed enough how important a home inspection is.

A home inspection will highlight any areas that need maintenance, either urgently or a few years down the line. If there are several issues that can be fixed, and you still want to buy the house, then you may be able to negotiate some money off of the price, your mortgage broker can help you with this.

A home inspection does cost money of course, and is normally several hundred dollars, but this is a step that should not be skipped, it will save you money in the long run, and may even help reduce your home insurance.

Other Fees

Legal fees need to be considered, and these will go to the lawyer or legal team that are helping you to buy your home. They will be ensuring all the  paperwork is in order, and that you have full legal ownership to your house and land.

There are also many taxes that will need to be paid, and this can really start to add up. 

The most obvious tax that needs to be paid in Canada, is the land transfer tax, often abbreviated to LTT. Land transfer tax will be a percentage of the value of your house, and this money goes to the local government.

Don’t forget also that you will need to pay yearly property tax, which again, is worked out as a percentage of the cost of your home, and must be paid yearly, otherwise you will receive a financial penalty.

There will be ongoing costs for the life of your home too, so try to budget for these, and have an emergency fund. 

Things like boilers breaking, or roof tiles coming off cannot be foreseen, so having some savings to deal with that is a really good idea.

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