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Personal finance

Useful list of expenses when buying a home

April 1, 2021

Are you in the market for a new home? You’ve come to the right place! Whether you’re a first-time homebuyer or looking to upgrade, there are some not-so-obvious costs you should keep in mind. Here’s a list of what you should budget for.

Buying: What are the one-time costs?

Moving expenses

Set aside the equivalent of 3% to 5% of your property value for these inevitable costs:

  • land transfer tax (commonly referred to as the welcome tax in Quebec)
  • notary or lawyer fees
  • adjustment of municipal and school taxes
  • mortgage insurance premium1
  • professional services such as a home inspection and appraisal
  • moving expenses
  • standard service connection fees (electricity, gas, telecom­munications, etc.)

Setting up your home

Sometimes, little expenses here and there can add up. In particular, keep in mind the cost of:

  • purchasing new furniture and/or household appliances
  • interior decorating: blinds, curtains, lighting, carpet cleaning, painting, etc.
  • outdoor renovations: installing a fence, landscaping, adding a pool, etc.
  • small odd jobs and slightly more substantial renovations

Need to renovate your new home?

RenoAssistance has a list of verified contractors in your area.

Building your own home? Your one-time costs will go up as you’ll also be paying for:

  • the preparation of plans and specifications
  • a building permit
  • surveying
  • landscaping
  • sales taxes
  • possibly water and/or soil analysis

Recurring costs: Up to 32% of your gross income

Once you’re settled in, you’re still not off the hook. It’s recommended that you set aside up to 32% of your gross income on annually-recurring fixed costs. These typically include:

  • your mortgage loan payment
  • standard service fees (electricity, gas, telecom­munications, etc.)
  • home insurance, life and disability loan insurance
  • municipal and school taxes
  • condo fees, if you live in a condo
  • RRSP repayment if you participated in the HBP

Use our calculator to estimate your mortgage prepayment charges.

Note that the lender may not impose a penalty if you buy a new property and take out a new loan with the same institution.

Selling: The most common expenses

Few people realize that it’s just as important to budget for the following expenses when selling your home, especially if you’re also buying a new property:

  • paying your mortgage balance (this one goes without saying), but it’s possible you’ll also be charged a prepayment penalty if you pay your loan in full before the end of your contract. Assess this amount properly with your financial institution before deciding whether to sell.
  • updating your certificate of location, a document that’s required for notarized transactions
  • taxable brokerage fees (the percentage specified in your contract with your real estate agent)
  • repairs, tests or analyses that the sale of your property is conditional on
  • a release fee, allowing you to register your mortgage discharge with the land registry
  • municipal and school tax adjustment
  • moving expenses

Don’t hesitate to ask your financial advisor or real estate broker for their valuable advice-they’re your allies.

1. If you have a down payment of between 5% and 20% to purchase your home, you’ll have to take out mortgage insurance from Canada Mortgage and Housing Corporation (CMHC) or Sagen. You’ll have the option of paying it off as a single lump sum or adding it to your mortgage amount and amortizing the payment.