Hidden costs to watch out for when buying a house

#House and home

Other expenses to consider when purchasing a home

When you think of the cost of buying a home, expenses like the down payment, realtor commission and moving costs probably come to mind. 

While these expenses usually make up most of your spending, there are other costs associated with home buying that people often overlook. Check out this list of costs you might encounter at different stages of the home-buying process.

Before closing

Home inspection

It’s a good idea to have your property evaluated by a certified home inspector. They’ll check things like the foundation, heating and cooling systems, electrical service, the roof and plumbing – important details you’ll want to know about before making an offer.

Approximate cost: $500

Down payment deposit

After your formal offer is accepted by the seller, you’ll need to make a deposit on the purchase price. This amount will be applied to your final payment of the purchase price.

Approximate cost: Variable, can be up to 5% of the property’s purchase price

Appraisal/property valuation

Before you’re approved for a mortgage, your lender may require an appraisal of the property’s value.

Approximate cost: $250–500, but sometimes waived by the mortgage lender

At closing

Legal or notary fees

Your lawyer or notary charges fees to search the property’s title to confirm that the seller currently owns the property and what liens (such as mortgages) are registered against the property that will have to be cleared at the time of sale. They will prepare the documents required to complete the sale and ensure that you receive title to the property you are buying.

Approximate cost: $500–$1500

Property survey and/or title insurance

A property survey is optional but sometimes requested by the lender. It’s used to verify the property’s boundaries, measurements of the land and position of the building on the property.

Title insurance is often used when a survey can’t be located or doesn’t exist. It’s used to protect ownership of the property and is typically purchased through your lawyer. It protects you against title fraud and may protect you against identity theft and fees that came up when your lawyer or notary conducted the property title search.

Approximate cost: Property survey: $750–$1,000; title insurance: varies based on property value; one time cost

Land transfer tax

This is a tax charged upon transferring the ownership of the property to a new owner. In some provinces, land transfer tax refunds are available for first-time home buyers.

Approximate cost: A percentage of the property’s purchase price, variable by province. Some cities charge an additional municipal land transfer tax. Visit your provincial government’s website for more information.


These taxes are generally only charged on new homes, not resale properties; however, some existing properties aren’t exempt.

Approximate cost: A percentage of the property’s purchase price, variable by province. Visit your provincial government’s website for more information.

Pre-paid expenses

If the seller has already paid for future expenses such as property taxes or utility bills, you’ll need to reimburse them as part of the legal closing process.

Approximate cost: Variable

Property taxes

Property taxes can be paid in different ways – as an upfront annual cost, in installments throughout the year, or as part of your ongoing mortgage payments.

If you opt for property taxes to be included in your mortgage payments, your lender will make payments to your municipality when due.

If you decide to make direct payments, contact your municipality to find out the amount you need to pay and when taxes are due.

Approximate cost: Variable

It’s important to consider all additional expenses before beginning the home-buying process to stay within your budget.
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After closing

Transfer fees

Some companies, especially utilities, charge a disconnect/reconnect fee when moving; you’ll likely see this on your first bill after moving.

Approximate cost: Varies by company

Utility deposits

If you’re a first-time home buyer who’s never held a utility account, the utility company will usually require a deposit for the first year.

You’ll likely get this money back in the form of a credit to your utility bill, either as a lump-sum or in instalments.

Approximate cost: Varies by company

Mortgage default insurance

If your down payment is less than 20% of the total purchase price of your home, you’ll have a high-ratio mortgage.

High-ratio mortgages require you to buy mortgage default insurance, which protects mortgage lenders in the event homeowners can’t pay their mortgage. For more information, see Mortgage insights: Terms and rules you should know.

Approximate cost: Varies depending on size of down payment; can be added to your ongoing mortgage payments

Home insurance

Home insurance offers protection for your home and its contents in the event of fire, natural disaster, theft or other unfortunate circumstances, and is required by lenders. Policies vary according to the options you choose and are priced according to the level of protection.

Approximate cost: Variable, paid annually or in instalments

Managing the cost and logistics of buying a home can be a big job. It’s important to consider all additional expenses before beginning the home-buying process to stay within your budget. Don’t forget that home ownership also often involves repairs and renovations as well the cost of furniture and décor. You may also want to evaluate which type of insurance coverage (link to insurance:protect more than just your home article) is right for you.

If the thought of buying a home makes you anxious about your finances, a financial security advisor can help you prepare. Your advisor can assess your financial readiness for home ownership, and lead you through setting goals towards owning the house you dream of.

The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.


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