Are you considering buying a new home? If so, you have come to the right place! Whether you are a first time homebuyer, looking to upgrade or downsize there are costs that are not-so-obvious you should keep in mind. Here is a list of what you should budget for.
Buying – What are the one-time costs?
Be sure to set aside the equivalent of 3-5% of your property value for these inevitable cost:
- land transfer tax
- notary or lawyer fees
- mortgage insurance premium
- professional services such as a home inspection and appraisal
- adjustment of municipal and school taxes
- moving expenses
- standard service connection fees (electricity, gas, internet, cablevision, etc)
Sometimes little expenses here and there can add up. In particular, keep in mind the cost of:
- purchasing new appliances and/or furniture
- small odd jobs and slightly more substantial renovations
- interior decorating (blinds, curtains, lighting, cleaning, painting, etc)
- outdoor renovations (landscaping, installing a fence, etc)
If you are building your own home your one-time costs will go up as you’ll be paying for:
- the preparation of plans and specifications
- building permits
- sales taxes
- possibly water and/or soil testing
Recurring costs: Up to 32% of your gross income
Now that you are settled in your new home, you are still not off the hook. It is recommended that you set aside 32% of your gross income on annually-recurring fixed costs. These typically include:
- your mortgage load payment
- home insurance
- property taxes
- standard service fees (electricity, gas, internet, cablevision, etc)
- possibly condo fees
- municipal and school taxes
Selling: The most common expenses
Very few people realize that it is just as important to budget for the following expenses when selling your home. Especially if you are buying a new home.
- paying your mortgage balance. It is possible that you will be charged a prepayment penalty if you pay your mortgage loan in full before the end of the contract. It is recommended you speak with your financial institution to understand and assess the amount of the penalty before you decide to sell.