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Consider these expenses when determining how much home you can afford.
Mortgage default insurance: You need mortgage default insurance if you have less than 20% down payment. If your down payment is less, lenders usually add the premium to your mortgage. Depending on where you live, you may also pay provincial sales tax on the premium. For more information, go to Canada Mortgage and Housing Corporation.
Legal fees: These include the cost of hiring a real estate lawyer to negotiate the purchase agreement and close the deal. Plus, the lawyer’s out-of-pocket expenses for things like title searches and registrations.
Property insurance: This is an ongoing expense of owning a home. It protects you in case of fire and some other disasters. You’re required to provide proof of insurance before the start of our mortgage.
Appraisal: An appraisal is a report that indicates the estimated value of a property. Your lender may order an appraisal for financing purposes, but you pay for the appraisal.
Taxes payable on purchasing land: Most provinces and some municipalities charge a one-time tax, usually called Land Transfer Tax or Property Purchase Tax. It’s usually based on a percentage of the home’s purchase price.
Survey: A survey identifies the exact size of the property, and the location of the boundaries, buildings, shared driveways and any overhanging structures on the property. These could impact the property value. Your lender may ask you for a current survey during the mortgage application process.
Home inspection: A home inspection by a qualified professional may save you headaches in the long run. A home inspector identifies potential problems with the home or outlines needed repairs. Your lender may ask for a home inspection report when you apply for a mortgage.
Title insurance: You may wish to buy title insurance to cover any title-related issues, such as fraud, encroachments or zoning non-compliance that may come up after closing. For more information, talk to your real estate lawyer.