When deciding if you can afford to buy a residential property, don't just figure out a harsh down payment and carry on from there.  There are in fact several other expenses that need to be taken into consideration when buying a property; these are called your closing costs.  Closing costs describe the expenses you'll have to cover out of your own pocket as well as the amount of cash essential in wrapping up the purchase.

Be Prepared

Like many things in life, it pays to prepare ahead of time when it comes to closing costs.  Closing costs should be part of the pre-approval discussion as they are equally as essential as saving for your down payment.

Now, if your mortgage is high-ratio and requires mortgage insurance coverage, the lender will certainly require validating that you hold at least 1.5% of the purchase price to secure the mortgage. This is in addition to your down payment. So, if your down payment is 10% of the purchase price, you’ll want to have at the very least 11.5% available to bring everything together. However certainly, the more cash money you have to fall back on, the better.

So with that stated, here is a list of the important things that will cost you money when you're buying a home. As rates differ per service, if you'd like a more precise quote of prices, please connect anytime, it would certainly be a pleasure to go through the specific numbers with you.

Inspection And/Or Appraisal

A home inspection is when you hire an expert to analyze the property's current state to ensure that you won't be surprised by any unanticipated issues. An appraisal is when you hire a professional to compare the property's value versus other properties that have recently been sold in the area. The cost of a home inspection is yours, while the appraisal cost is in some cases covered by your home insurance coverage and in some cases covered by you!

Lawyer or Notary Fees

You will be required to hire a legal professional to handle all the legal paperwork associated with buying a property. They are responsible for transferring the title from the seller over to you and to make sure the lender is registered correctly on the title. This is usually one of the more expensive costs.

Taxes

Depending upon which province you reside in and the purchase price of the building you're looking to buy, you might have to pay a residential or commercial property transfer tax or land transfer tax. This cost can be high, upwards of 1-2% of the purchase rate. So, you'll need to know the numbers well beforehand.

Insurance

Before you can close on mortgage financing, all banks want to see that you have property/home insurance coverage in place for when you take possession. If catastrophe strikes and something takes place to the building, your lender must know exactly what is covered on your insurance policy.

Unlike residential property insurance coverage, which is necessary, you might also take into consideration home mortgage insurance policy, life insurance policy, or a disability insurance plan that protects you in case of unforeseen events. Not necessary, yet worth a conversation.

Moving Expenses

Congratulations, you've successfully purchased a residential or commercial property; currently you need to get all your stuff there! Do not ignore the cost of moving. If you're moving across the nation, the cost of hiring a moving company is high, while leasing a relocating vehicle is a little bit more reasonable; it all accumulates. With any luck, if you're moving locally, your prices total up to gas money and pizza for friends.

Utilities

Connecting new services to your new home is much more time consuming than expensive. Nonetheless, if you're relocating to a new province or don't have a history of paying utilities, you might be called for to come up with a deposit for services. It doesn't really make sense to acquire a building if you can't afford to turn on the power or attach the water.

So there you have it; this covers most of the expenses associated with purchasing a property. Nonetheless, this checklist is never completely accurate as each situation is unique, but as stated earlier, planning for these prices is an excellent suggestion and must be part of the pre-approval process.

If you have any type of inquiries regarding your closing costs or anything else mortgage-related, please feel free to contact us anytime; it would be great to speak with you!