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Home-buying 101: uncovering the hidden costs of buying

Interest adjustments. Services charges—and at least three different types of tax.

Welcome to the hidden costs of home buying.

But don’t worry. We’ve uncovered an ‘A to Z’ of extra costs to keep in mind, so you can develop a home-buying savings strategy that literally covers everything.


As per the Agreement of Purchase and Sale (APS), you (the buyer) will have to reimburse the seller on a prorated basis if some bills have been prepaid beyond the closing date (i.e. property taxes, utility bill, maintenance fees, etc.). Your lawyer will process these adjustments on your behalf as part of overall closing costs (see below).

Amount to budget for: $300 to $500 (as part of your overall Closing Costs)


Depending on whether you’re buying a new home from the builder, or an existing property—appliances may or may not be included in the purchase price. If they’re not, you’ll need to factor in the cost of appliances into your home-buying budget.

Amount to budget for: Will vary (depending on number of appliances/cost of each)

Appraisal Fees

Lenders typically require an appraisal to confirm that the value of the property is not less than the purchase price. The average appraisal cost varies, so be sure to ask your lender what they charge (and whether they’ll consider eating up the cost as your condition for choosing them as your mortgage provider).

Amount to budget for: $350 to $500

Closing Costs

These generally refer to legal fees, property tax and utility adjustment costs, and land transfer taxes (for more on each of these keep reading on).

Amount to budget for: $15,000 to $30,000

Condo Fees

If you’re buying a condo, townhouse, or a home within a gated community, you may be charged a monthly fee to cover the costs of common area maintenance and operations (such as landscaping, snow removal, security, etc.).

Amount to budget for: $500 to $800/month (cost could be more or less depending on the size of the unit/property)


There are two ways HST will have an impact on real estate transactions:

  1. On the price of a new home from the builder: HST will be applicable on the purchase price of the home (albeit new homes purchased as primary residences across all price ranges will qualify for a rebate of up to $24,000 of the 8% provincial component of the HST). The HST on new builds is quite often built into the price of the new home and the builder applies directly for any rebates.
  2. On the commission payable on resale homes: Applies to real estate commissions only, as it is a service being provided to the consumer, not to the price of the home.

Amount to budget for: Will vary (depending on purchase price)

Interest Adjustment

This is the calculation of interest from the closing date—to the date the first mortgage payment is calculated from. Let’s say that you close on the 17th of the month and your first full mortgage payment is due on the 1st of the following month—the interest adjustment would be from the 17th (of the current month) to the 1st of the following month (i.e. the day when your first full mortgage payment is due).

Amount to budget for: Will vary (depending on mortgage amount/date of transaction)

Home Inspection

The condition of a home inspection is included to identify any existing and/or potential underlying problems in a property. The report typically lists any discovered faults and outlines costs of repairs—which will prove to be immensely valuable to you for two reasons:

  1. It provides you with the option to back out of the agreement to purchase if you feel the property is too big of a lemon to take a risk on.
  2. It gives you added bargaining power to get the seller to commit to conducting repairs at their expense before moving forward with the sale, or significantly reduce their asking price.

Amount to budget for: $350 to $500

Home Insurance

Most lenders will insist that you have enough home insurance to cover the total cost of the property (since the property is their security for the loan). Should your home be completely destroyed, the insurance company is required to pay the lender first. You will still own the lot but will have to negotiate with a lender to borrow to re-build.

Amount to budget for: Will vary (based upon the value of your home and current reconstruction costs)


If you’re purchasing a newly constructed home, keep in mind that there will likely be a need to finish off/landscape the yard, get your driveway paved, put up a fence, etc.

Amount to budget for: $1,500

Land Transfer Tax

The provincial Land Transfer Tax (LTT) applies to all properties in Ontario and is a percentage of the purchase price (which varies depending on the value of the property you’re purchasing). However, if you’re a first-time homebuyer there’s good news. Thanks to the Land Transfer Tax Credit for First-time Homebuyers, you can claim and receive a full refund of the provincial LTT amount (up to $4,000 maximum).

The Provincial Land Transfer Tax is calculated as follows:


Mortgage Amount:







$55,000.01 –



$250,000.01 –






(land contains one or two single family residences)















Amount to budget for: Will vary depending on the purchase price of your home (and will be included by your lawyer as part of the overall closing Costs). If you’re purchasing property in Toronto, you’ll also have to pay an additional Toronto Land Transfer Tax.

However, just like the Provincial Land Transfer Tax Credit for First-time Homebuyers, you can also qualify to receive a rebate of the full amount up to $4,475 on eligible homes purchased after March 1, 2017 (if you’re a first-time homebuyer).

The Toronto Land Transfer Tax is calculated as follows:


Mortgage Amount:







$55,000.01 –



$250,000.01 –



$400,000.01 –

















Amount to budget for: $3,000 (as part of your overall Closing Costs, if applicable)

Legal Fees

Unfortunately there’s no ‘objecting’ to these. You need a lawyer (ideally a real estate layer) to handle the many complicated details to home buying. This includes: 

  • Reviewing the terms of the offer
  • Preparing/signing the mortgage
  • Conducting a title search on the property (which ensures the seller has the legal right to sell the property and that there are no other issues such as liens, mortgages, etc. that could prevent you from taking full possession).

Amount to budget for: Will vary depending on the purchase price of your property (and will be included by your lawyer as part of the overall Closing Costs)


Over time, wear and tear on a home is inevitable. So, be sure to set aside (and regularly contribute to) an emergency fund that is solely dedicated to covering the cost of home repairs down the road.

Amount to budget for: As a general rule of thumb, set aside about 1% of the value of your home per year.

Mortgage Insurance

If your down payment is less than 20%, mortgage loan insurance is required to protect the lender in case you default on the mortgage. Premiums range from 2.8% and 4.0% depending on the amount of your down payment and the amount of your mortgage. Additionally, you’ll also need to pay provincial sales tax on the premium on the date of closing if you live in Ontario, Manitoba, Saskatchewan, or Quebec (PST cannot be added to your mortgage, so you’ll need to pay this amount up front as part of the overall closing costs).

Amount to budget for: Will vary

Moving Expenses

Don’t forget to include the cost of a professional moving company or a rental truck (if you plan to move yourself). If you go with a mover, keep in mind they usually charge based on:

  • The distance of the move
  • If you require assistance with packing
  • How many boxes and large items you have

So, be sure to get estimates from several moving companies before you book one. For the rental truck, cost varies depending on the size of the truck and the distance being driven (since rental companies tend to charge a daily rate + cost per kilometer).

TIP: One way to minimize moving costs is to move opposite of peak periods (peak periods being the first/last of the month). By booking times when movers tend not to be as busy, you may be able to negotiate a better price for their services.

Amount to budget for: Will vary

Property Taxes

Charged annually (where the total amount due is usually broken up into a series of installments throughout the year), property taxes are assessed by the local municipality.

Amount to budget for: Will vary (depending on the value of your property and the town/city/neighbourhood in which it is located)

Service Charges

These are all the little things you use on daily basis that you have to connect/activate at your new place such as cable TV, Internet, telephone, and utilities.

Amount to budget for: $300

Title Insurance

This protects you against title defects, liens against the title, title fraud, encroachment problems, and other issues related to title. The cost is a one-time fee, typically a few hundred dollars—but worth the peace of mind it will provide.

Amount to budget for: $325 (most real estate lawyers will add this as part of final closing costs)

Window Coverings

The great news—you have a whole new set of windows. The not so great news, the cost of covering all those windows will come directly out of your pocket if window dressings haven’t been included in the conditions of sale.

Amount to budget for: Will vary (based on size/number of windows)

When it comes to home buying, let Educators Financial Group help you uncover all the hidden facts.

Whether you’re shopping around for your first mortgage or are looking to renew/refinance your existing one—reach out to Educators Financial Group. No matter where you are on the pay grid or what your pension income is in retirement, we can offer you a mortgage solution that fits your specific needs and budget.

Have one of our mortgage agents contact you.


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