Do you often find yourself browsing listings and dreaming about your next move? If so, it’s essential to look beyond listing prices and down payments. Whether you're looking to upgrade or make your first investment, it's crucial to consider various financial aspects before buying a home. Here are some key expenses to factor into your decision:

Utilities

Upgrading to a larger home or one with older, less efficient appliances can significantly impact your utility costs. It's important to estimate these additional expenses accurately. Consider the size of the home, the age and efficiency of the heating, cooling, and water systems, and any additional appliances that might come with the property. Add these estimated costs to your current monthly budget to see how a move might affect your overall spending. Doing this will help you avoid any surprises when your first utility bill arrives after the move.

Mortgage Penalty

Breaking your current mortgage term early might come with a penalty, which is usually around three months' worth of interest. However, this amount can vary depending on your lender and the terms of your mortgage. It's crucial to read the fine print of your mortgage agreement and understand the penalties for early repayment or refinancing. In some cases, negotiating with your lender for a lower penalty or even exploring the possibility of porting your mortgage to the new property might be beneficial. Always consult with your financial advisor to understand the best course of action.

Moving Costs

Moving is never just about transporting your belongings from one place to another. There are numerous additional expenses to consider. If you plan to hire professional movers, get quotes from multiple companies and check for any hidden fees, such as charges for moving large items or extra insurance. If you opt for a DIY move, factor in the cost of renting a moving truck, fuel, and possibly temporary storage. Don’t forget smaller costs like packing materials or even throwing a pizza party to thank friends who help you move. If your schedule allows, consider moving during the off-peak season when costs tend to be lower.

Legal Fees

Hiring a trusted real estate lawyer is essential to ensure that all the legal aspects of your home purchase are handled correctly. Legal fees can vary widely, so it’s important to understand what services are included in the fee structure. These services typically include reviewing the purchase agreement, conducting a title search, handling the transfer of funds, and registering the new property with the local land registry office. Always get a detailed breakdown of the estimated costs and confirm these with your lawyer before you sign any offers. This will help you avoid any unexpected charges at closing.

Additional Considerations

Beyond these primary expenses, there are other costs to consider when buying a home. These might include home inspection fees, property taxes, insurance, and potential renovations or repairs needed immediately after purchase. A thorough home inspection can reveal issues that might not be apparent during a regular viewing and can give you leverage in negotiating the purchase price or requesting repairs before closing.

By carefully considering all these financial aspects, you can make a well-informed decision and ensure that your dream move doesn't turn into a financial nightmare. Planning ahead and budgeting for these expenses will help you transition smoothly into your new home and enjoy it from day one.

Ready to dive deeper into the home-buying process? Visit our latest blog for comprehensive tips and insights to guide you every step of the way. Contact us to ensure you're well-prepared for a successful move by uncovering all potential hidden costs!

First-time buyers of new construction homes in Canada can now access longer mortgage amortization periods.

Effective August 1st, 2024, lenders can offer 30-year amortizations for insured mortgages to first-time homebuyers of new construction homes, following a modification by the federal government. Previously, the maximum amortization for an insured mortgage—one requiring mortgage insurance due to a down payment of less than 20%—was 25 years. Homes priced at $1 million or more automatically require a 20% down payment and an uninsured mortgage loan.

The federal government states that extending payments over an additional five years will help lower monthly mortgage payments, making housing costs more affordable for young Canadians and incentivizing the construction of much-needed housing supply.
“For every young Canadian who wants to own a home, we want them to qualify for a mortgage and afford their first home. One of the biggest hurdles to homeownership for younger Canadians is qualifying for a mortgage and managing the monthly payments,” said Chrystia Freeland, Deputy Prime Minister and Minister of Finance, in a press release. “That is why, starting August 1, first-time buyers of new builds will be able to reduce their monthly payments with up to 30-year mortgages. This is just one of many new measures our government is implementing to make homeownership a reality for younger Canadians.”

What do I need to qualify for a new build 30-year amortization?
If you’re a first-time buyer shopping for a new construction home and plan to take out a 30-year mortgage, here are some requirements to keep in mind:

• At least one borrower on the application must be a first-time homebuyer, meaning they have never purchased a home before and have not occupied a home as a principal residence that they or their current spouse or common-law partner have owned in the last four years.
• The home being purchased must be newly constructed, meaning it has not been previously occupied for residential purposes.
• Only high-ratio mortgages will be applicable—mortgages where the loan amount exceeds 80% of the home price (i.e., has a down payment of less than 20%).
• All other eligibility criteria for government-guaranteed mortgage insurance will still apply.

Thirty-year amortizations for insured new build mortgages were first announced in the 2024 federal budget, alongside other affordable housing measures.

Source: Royal LePage Team Realty