Even if you’ve saved enough to afford the down payment, the mortgage, the taxes, and the mortgage insurance, you still need to have some money left over to cover all the other costs associated with homeownership. To help you plan better, here are 5 costs you might not expect as a homeowner.
There are many more costs beyond the actual price of the property that you need to be ready to pay upon closing. This includes insurance, land transfer tax, property inspections, legal fees, title insurance, and any adjustments on the utilities. To ensure you have enough money on hand, it’s important to talk to a professional who can help you calculate the estimated costs. In most cases, the closing costs could range from 1.50 – 1.75 % of your purchase price, but it will vary depending on the property and location.
Most homebuyers factor in the immediate maintenance and repair costs, but they often overlook the renovations they may need to do in the near future. Renovating a deteriorated front porch, cracked driveway, broken kitchen cabinets, outdated bathroom, or an unfinished basement costs a significant amount. You might also want to make some aesthetic changes to your home to make it feel more like yours, so keep this in mind.
You won’t know whether or not the home has a termite problem or critter infestation until you move in. That’s why it’s important to do a thorough property inspection before purchasing. Professionals will often identify any signs of pest damage and entry points. Even if nothing is found, it’s always wise to have a few extra dollars in the bank to address any unexpected pests that might be also living in your home.
Higher Interest Rates
The interest rates in Canada have been low for so long that they really can only go up. If you have a fixed-rate mortgage, these rate hikes can still impact you but only when your mortgage is up for renewal at the end of your term. The rate hike can lead to higher interest rates on your car loans, student loans, credit cards, and lines of credit. This can reduce your wiggle room and tighten your monthly cash flow. That’s why it’s important to pay down debt and only buy a property with a mortgage that you can easily afford.
Higher Utility Bills
The bigger the house, the more energy it will consume. That’s why homeowners should expect their utility bills to increase when transitioning from renting to owning. But that’s not the only thing you need to think about. You should also consider the rising cost of energy in the future, and how that will impact your energy bills.
To be adequately prepared before jumping into homeownership, reach out to The Mortgage Advisors today. We can offer the professional guidance and advice you need before purchasing.