Leeway and initial costs

Should you borrow to the maximum to buy your dream home? It is wiser to give yourself some leeway so that your mortgage payments do not cripple you financially.

A house is not the only major expense in your life. You will eventually need a new car! It is a good idea to have a contingency fund to cover the unexpected, including initial costs.

Because, of course, mortgage payments are not the only cost to consider. You must plan for initial costs. The most frequently overlooked cost is the taxe de bienvenue, or welcome tax, named for the minister who implemented it, Jean Bienvenue. For a $100,000 home, for example, this tax is $750.

On average, you should anticipate $5,000 in expenses for the first months after you buy your home. Initial costs should not be taken lightly, and you must have enough money to cover them. The mortgage is calculated according to the price of the house and cannot be used to cover initial costs, which include the following:

• Property inspection and evaluation
• File review by the Canada Mortgage and Housing Corporation (CMHC)
• Notary fees
• Welcome tax
• Moving costs
• Adjustments (taxes, common costs, insurance, heating oil, heating equipment rental contract, etc.)
• Renovations (painting, curtains, etc.)
• Landscaping
• Certificate of location (generally covered by the seller)
• Telephone, electricity, cable hook-ups
• Change of address (mail forwarding by Canada Post)