Learn about the hidden costs of homeownership before buying a house in Canada!
Transitioning from renting to owning a home is an exciting milestone, but it’s essential to understand that homeownership involves more than just a monthly mortgage payment. Beyond the cost of the house itself, there are numerous hidden expenses like closing costs, property taxes, and ongoing maintenance to factor into your budget.
With interest rates currently favorable, many people see this as a great time to buy a home. However, before jumping in, you need to consider more than just the mortgage payment. One of the first costs you’ll encounter is closing costs, including:
- Realtor’s commission
- Bank underwriting fees
- Sales tax (GST/HST and QST)
- Legal fees
According to the Canada Mortgage and Housing Corporation (CMHC), closing costs typically range from 1.5% to 4% of the house’s total cost. For instance, if you’re purchasing a $600,000 home, you could pay up to $24,000 in closing costs alone.
Hidden Costs Of Homeownership
Home Insurance
In many cases, home insurance premiums are included in your monthly mortgage payment. Home insurance is essential to protect your investment against unexpected events, such as:
- Fire
- Lightning
- Theft
- Vandalism
- Windstorm
- Hail
- Water Damage (e.g., burst pipes, flooding)
- Snow Storm
Mortgage Insurance
First-time buyers often qualify for smaller down payments – sometimes as low as 5% – through CMHC programs. However, this requires purchasing mortgage insurance, which safeguards the lender if you’re unable to meet your mortgage obligations.
Appliance Repairs and Replacement
Unlike renting, where landlords handle appliance issues, homeowners are responsible for repair and replacement costs. Appliances like refrigerators, washers, dryers, and HVAC systems can cost hundreds to thousands of dollars to replace. Little by little these can add up and become a burden.
Landscaping and Snow Removal
Owning a home means maintaining your property. This includes tasks like mowing the lawn, gardening, and snow shoveling. Whether you choose to invest in the necessary equipment or hire professionals, these costs can add up throughout the year.
Property Taxes
Homeowners in Canada must pay annual property taxes based on their property’s assessed value. These taxes support local infrastructure and services, but failing to pay them could lead to foreclosure by the government.
Repairs and Maintenance
Homes require regular upkeep, from fixing leaky faucets to replacing roofs every 10–15 years (which can cost at least $5,000). Unless you’re skilled in DIY repairs, hiring electricians, plumbers, or contractors for these tasks is often necessary, adding to your expenses.