You’re all set to make an offer on a home you love…only to discover there are all kinds of hidden costs that weren’t included in the listing price. Understandably, these costs can be a dealbreaker for a home buyer. That’s why it’s important to prepare yourself for potential hidden costs when buying a home ahead of time.
Hidden Costs Every Home Buyer Needs to Know About
So, if you’re hoping to save yourself some nasty financial surprises down the road, don’t miss the rest of this post, where we break down some of the common (yet hidden) costs associated with home buying.
Home inspection fee
This isn’t necessarily a “hidden” fee, but it is one many new home buyers forget to factor in.
Although a home inspection isn’t necessarily required, it’s almost always a good idea. During these inspections, a potential home buyer can find out about any potential issues that could cause them a major headache down the road. These inspections tend to cost between $300 and $1000. However, that’s a small investment compared to what it could cost you to unknowingly buy a home with, for example, faulty plumbing.
(Home inspections are an important part of avoiding home buyer’s remorse. Read more about avoiding this feeling in this post)
Appraisal fees
Are you planning on getting a mortgage for your home? Most home buyers are. However, if you plan on going this route, there’s a particular fee worth noting that many people aren’t aware of. It’s known as the appraisal fee.
Because the amount your lender is willing to give depends on the home’s appraised value, the home first needs to be appraised. So, this fee (typically between $275 and $500) covers that appraisal.
Keep in mind, this fee isn’t a sure thing. Depending on arrangements between lenders, it’s often waived. Just be sure to find out ahead of time!
Land transfer tax
Are you a home buyer in Canada who doesn’t live in Alberta, Nunavut, Saskatchewan, or the Yukon? Then the land transfer tax is important to consider if you’re buying a home! The LTT (between 0.5% to 2.5% of the property value depending on your province) goes toward the province when you buy property.
As this article from Rates.ca explains:
“Many provinces use a multi-tiered system to calculate the amount of tax owed. On a $500,000 home in Ontario (but not Toronto), for example, 0.5% is paid on the first $55,000, 1% on the next $195,000, 1.5% on the next $150,000, and 2% on the amount above $400,000. That works out to $6,475.”
Insurance
You’re probably planning on buying home insurance (even if it isn’t necessarily required). Still, there are a few different types of insurance each home buyer needs to make a note of when they’re preparing themselves for hidden costs that could come up.
Here are some of the types of insurance worth looking into:
- Title insurance
- Mortgage default insurance
- Mortgage life insurance
(Before you go, don’t miss this post with more tips for simplifying the home buying process)
What Else Should Every Home Buyer Know?
These are just some of the hidden costs every home buyer needs to be aware of. It’s incredibly important to do your research and work with a team you trust during the home buying process to keep surprises to a minimum.
But in addition to these hidden costs, what else should every buyer know? That Souqh.ca can help them ditch a lot of the stress that comes with home buying! From finding trusted service providers to streamlining documentation and simplifying communication, we’ve thought of it all. Click here to learn more about our unique platform and what it can do for you.
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