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    Tips for first time home buyers

    Now that you’ve successfully saved the down payment for your first home, you’ve achieved a major financial goal. So what additional housing-related expenses, other than your mortgage, do you need to consider?

    Home inspection

    A home inspection by a qualified home inspector will reveal if a property has issues, such as a foundation leak, that are not obvious during a viewing. Ideally, do this before making an offer.

    Closing costs

    As the buyer of a new home, some of the most common costs you’ll incur when the purchase closes are:

    • Land transfer tax. Most provinces and some major cities impose a land transfer tax, calculated as a percentage of the home’s purchase price. However, first time homebuyers may be exempt from a portion of this tax.
    • Property survey indicates the boundaries and measurements of the land, positions of major structures, and any easements or encroachments on the property.
    • Mortgage costs may include a fee to set up the mortgage and conduct a property appraisal.
    • Mortgage default insurance. If you put down less than 20% on your home, you’ll need mortgage default insurance. The amount you’re charged increases on a sliding scale as the amount you put down falls below 20%.
    • Legal fees and disbursementsfor reviewing the purchase and sale agreement.
    • Title insurance is optional and covers issues that may arise due to encroachment, liens, title fraud, undischarged mortgages and other issues relating to the property’s previous owners.
    • Adjustment costs are costs prepaid by the seller, covering the period after closing that have to be refunded e.g. property tax, utilities, condo fees. For metered services like hydro, gas or water, ensure that the meters are read on the closing day.
    • HST (new construction only)

    Note that realtor commissions are paid by the seller.

    Home insurance

    Protect your home and its contents by purchasing insurance.

    Moving expenses

    This may include the cost of renting a truck or van, if you’re moving yourself, or hiring a moving company, plus the cost of boxes and other packaging materials.

    Utility connection charges

    The one-time cost of hooking up your various utilities such as electricity, gas, cable, internet, and landline (if you’re getting one).

    Mail forwarding

    You may choose to direct Canada Post to forward your mail for the next 3 or 6 months to your new address.

    Immediate repairs and maintenance

    If the seller neglected basic maintenance and repairs, you may have to spend some money immediately: repairing a broken step or railing, replacing a dripping faucet or non-functioning light fixtures, even repairing or replacing the roof.

    Renovations, new décor, furniture and appliances

    Unless your new home is in “move-in condition”, you may be considering minor or even major renovations to make it more livable. Or perhaps you’d like to repaint, re-carpet, and change window covers or light fixtures to better suit your style. Some of the furniture from your previous home may work in the spaces of your new home. But for the rooms where you can’t reuse old furniture, consider buying second hand or even borrowing pieces before going out and buying new. If major appliances, like washers and dryers, refrigerators, or dishwashers were excluded from the home purchase, they will have to be replaced.

    The down payment is a major milestone but it’s also just the start of the cost of homeownership.

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