Home Buying Costs
Here's a list of what to expect
Purchasing a home in Alberta is an exciting endeavor, but it’s essential to be aware of the various costs associated with this significant investment. Beyond the purchase price, there are several expenses to consider when budgeting for your dream home.
1. Down Payment: This initial upfront payment is a percentage of the home’s purchase price. In Canada, a minimum down payment of 5% is required for homes valued up to $500,000.
2. Mortgage Loan Insurance: If your down payment is less than 20% of the home’s value, you’ll need to pay for mortgage loan insurance, which protects the lender in case of default. The fee can be up to 4% of the loan amount. It is added to the mortgage so is not out of pocket.
3. Home Inspection: Having a professional inspect the property for potential issues can save you money in the long run by identifying any necessary repairs or maintenance. About $500
4. Legal Fees and Disbursements: Hiring a real estate lawyer to handle the legal aspects of the transaction, including title search, transfer of ownership, and mortgage registration, comes with associated costs. About $1,500
5. Property Transfer Tax: Fortunately there is no land transfer tax in Alberta.
6. Title Insurance: While not mandatory, title insurance provides protection against issues that may arise from defects in the property’s title. About $400
7. Appraisal Fees: Lenders often require an appraisal to ensure the property’s value aligns with the loan amount. $250-ish
8. Moving Costs: Whether you hire professional movers or handle the move yourself, these expenses can add up.
9. Utility and Service Connections: Setting up utilities like electricity, water, and internet for the first time can require initiation fees. Approximately $200
10. Property Taxes: These vary depending on the property’s assessed value and the municipality’s tax rates. In most cases they can be paid monthly using the City of Calgary TIPPS program. Amount depends on the time of year and the property’s assessed value.
11. Home Insurance: Lenders require homeowners to have insurance coverage to protect against damage or loss. Of course this varies quite a bit depending on the value of the improvements, types of issues and terms of the policy. About $1,500 to $3,000 annually.
12. Condo Fees: If you’re purchasing a condominium, monthly condo fees cover shared expenses like maintenance and amenities.
13. Renovation and Furnishing Costs: Depending on the condition of the home, you might need to budget for renovations or furnishings.
14. Maintenance and Repairs: Owning a home comes with ongoing maintenance costs to keep the property in good condition.
15. Closing Costs: These miscellaneous expenses can include things like courier fees, home warranties, and other administrative costs. This should be minimal.
While the costs may seem daunting, thorough financial planning and research can help you make informed decisions. Working with a real estate professional and a financial advisor can guide you through the process and ensure you’re fully prepared for the financial responsibilities of homeownership in Alberta.
