With the continuous growth of Toronto’s condo market, there are many new homeowners in the city each and every day and the pressure is on for young couples to get into the property ownership game before the market changes. Don’t get caught up in the gold rush! There are lots of important considerations before charging out and purchasing that dream home. First, take a lesson from our friends down south and be sure you have carefully weighed all of the related financial expenses. First time homeowners often forget or underestimate the extra hidden costs associated with each step of the buying process.
Purchasing a Home
Buying the home itself is far from the only money you will need to shell out during the purchasing process:
- Home inspections and appraisals will be necessary to avoid fraud and unpleasant surprises down the road.
- Depending on your area, closing costs can be anywhere from 2-4% of your total mortgage.
- Homeowners insurance costs more than renter’s insurance as it has to cover the costs of repairs and rebuilding as well as replacing your personal items.
- PMI or mortgage loan insurance may be required for buyers who are unable to provide a down payment of 20% of the mortgage.
Even if you get a great deal on that rundown old bungalow, be sure to get estimates on the repair work that will be required to make it livable and count that in to your total payment. You may also wish to upgrade things like doors and windows in order to increase their energy efficiency.
Also, many new homeowners want to immediately make the space their own and spend a large amount of money on décor, furniture, art, window coverings, and wall treatments and rack up extra credit card debt in the wake of buying their new home. To save some money, take your time finding the perfect look for each room and start with the rooms that get the most use: You can outfit the second guest bedroom once you have a bit of extra money again in the future.
Upkeep and Maintenance
Homeowners are often held to local bylaws regarding the upkeep of public facing parts of their property which will require a certain amount of time and money spent on lawn care and outdoor maintenance. Homeowners Associations will also have fees and extra costs for community projects.