5 Hidden Costs of Homebuying & Budgeting for Them

Buying a home is an exciting milestone, especially for first-time buyers. However, the journey involves more than just the purchase price. Beyond your down payment and mortgage, several hidden costs can catch new homeowners off guard. Here are five often-overlooked expenses, and tips on how to budget for them.

Home Inspection Fees

A home inspection is crucial to uncover any hidden issues with the property. In Ontario, this typically costs between $300 and $600. To avoid surprises, set aside funds for this early in your homebuying process.

Land Transfer Taxes

Land transfer tax is a significant expense in Ontario, often overlooked by buyers. The amount varies depending on the home’s price and location. There are many calculators available for you to estimate how much extra to set aside. First-time buyers may qualify for rebates, so it's important to factor this into your budget.

Closing Costs

Closing costs can include legal fees, title insurance, and mortgage fees, ranging from 1.5-4% of the home’s purchase price. For a $1,000,000 home, this could be an additional $15,000 to $40,000. Get an estimate from your lender early on and save accordingly.

Home Insurance

Lenders require home insurance, and it’s crucial for your own protection too. Costs typically range from $1,000 to $2,000 annually. Get quotes from multiple insurers and include this in your budget.

Moving Expenses

Moving isn’t free and can quickly add up, whether you’re hiring movers or renting a truck. Plan to set aside at least $1,000 for moving expenses, including packing supplies and possibly temporary storage.

How to Budget for These Costs

To avoid surprises, include these hidden costs in your budget from the start. A good rule of thumb is to set aside 1.5% to 4% of your home’s purchase price for closing costs. By planning ahead, you’ll be prepared for a smoother home-buying experience.

By being aware of these hidden costs and budgeting for them in advance, first-time buyers can enjoy a smoother transition into homeownership. Happy house hunting!

Are you ready to start your homebuying journey? Reach out to me, and let's discuss!