If you’ve been renting and you’re about to enter into the Calgary real estate market, you may not realize the extra costs associated with buying a house, beyond your actual mortgage. I’ve summarized most of the additional costs to purchase a home, below.
Your Down Payment
Before 2008, you could buy a house without a down payment (commonly called 0% financing). Of course, you had to qualify with a stellar credit rating and a good income to debt ratio. However, you now have to have at least a 5% down payment to get a mortgage, in Canada. Your down payment will likely be the largest extra cost of purchasing a house in the Calgary real estate market.
Besides your down payment, CMHC fees are your next most substantial extra cost. All mortgages, in Canada, have to be insured if the down payment is less than 20% of the purchase price. CMHC insurance cost calculations can be complicated so it is best to get a thorough explanation from your mortgage advisor as to what your fees will be. Luckily, the CMHC cost can be rolled into the mortgage and amortized. If you have a 25 year amortized mortgage, you get 25 years to pay down your CMHC fees as well. If you can manage to put down 20% or more of the purchase price you can avoid CMHC costs all together.
Home Inspection Costs
The cost of a home inspection is minimal. It is almost always a good idea to get a home inspection done, whether you’re purchasing a house, townhouse condo or apartment condo. Deficiencies like leaks and mold cannot often be detected by the home buyer but a good home inspector will be able to point out any and all deficiencies with the property. The cost of a home inspection can range from $350 to $800+. The price depends on the size of the house that you’re buying.
Banks often want an independent 3rd party to confirm that the sale price of the home that you’re purchasing is reasonable for the market. This independent 3rd party is often an appraiser who will view the house and submit a report or professional opinion about the sale price. Depending on your bank or mortgage broker, the appraisers fee may be covered or you may have to pay the amount out-of-pocket. An appraiser can charge between $150-$300.
Lawyers are responsible for the transfer of funds, among other things. A real estate lawyer will charge anywhere from $400 to $1000 to process your Calgary real estate transaction.
- If you’re buying a condo, you’ll have to budget for condo fees. These fees can vary, they are due monthly and will continue until you’ve sold the property.
- If you have a mortgage you are required to have home insurance. Home insurance is dependent on the size and value of the house but like condo fees, your home insurance premiums will be due, monthly.