Along with the excitement of purchasing a new home, comes the additional costs that you will be expected to pay as a homeowner. Apart from covering the mortgage of your home, you’ll have additional expenses – such as home insurance – that you will be expected to cover. If you’re looking to budget for a home purchase, it’s important that you consider these costs as they can add up to thousands of dollars each year.
To help you make educated decisions when budgeting, we’ve compiled a list of the major home ownership costs.
Home Insurance
Home insurance policies help protect against serious damage and destruction, like fires, leaks, floods, or break-ins. It also protects a homeowner from personal liability. Some banks may offer home insurance products, although you can typically purchase a home insurance policy through a home insurance agent or broker. You may get better rates if you use a broker or agent. It’s also important to keep in mind that policies typically renew on an annual basis.
Condo Fees
The cost of maintenance fees should be taken into account when you’re buying a condo. This recurring cost is in addition to your mortgage and impacts how much home you can afford.
Your mandatory monthly fee will vary by your building and square footage. It typically covers:
- Utilities (such as water and garbage collection)
- Building insurance
- Maintenance of common areas (such as the gym, pool, front desk, hallways, landscaping)
- Building reserve fund (covers emergencies and long-term maintenance projects such as a new roof or elevators repairs)
What Are Status Certificates?
If you’re looking to purchase a condo, you’ll want to look into obtaining a status certificate so that you have as much information about the building and your unit as possible before buying. A status certificate provides valuable information about the condo corporation and its financial situation. It includes details on the budget, legal issues, the reserve fund, maintenance fees, and any fee increases expected in the future. You’ll want to carefully review your status certificate with your lawyer before making a purchase.
Property Tax
Property taxes are paid annually by homeowners to their municipality. These taxes are ongoing and are separate from your mortgage. Your annual property tax can often be paid in installments- it’s important to remember that this cost is not due at closing, but is a recurring cost.
How Are Property Taxes Calculated?
Your property tax rate will vary depending on the value of your property as assessed by your provincial assessment authority. This is then multiplied by a rate that falls between 0.5% to 2.5%.
How Do You Pay Property Taxes?
You can pay your property taxes either through your mortgage provider or directly to your municipality.
Your Utility Bills
When you purchase a home, you’ll have to set up or transfer your utility bills to your new home. If you live in a condo, these costs may be included in your monthly maintenance fee. Your utility bill will include:
- Hydro (electricity)
- Heat
- Water and Garbage
- Internet, Phone, Cable
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