Home buyers, especially first-timers, often are not prepared for the additional costs involved in purchasing the property. While the purchase price of the home is by far the largest cost, it's important for you to take into account the numerous direct and indirect expenses related to getting a mortgage and gaining ownership.

While different costs will apply in each case, here's a list of things to consider:

Mortgage Application Fee
It costs lenders money to process your application and some may pass these costs on to you. However, with the highly competitive nature of the mortgage industry, many will waive this fee, especially if you have other accounts with them.

Appraisal Fee
Before lending you any money, most finance companies will have their own appraiser determine the value of the property. The borrower pays the cost of the appraisal which will be at least a few hundred dollars. You may be able to avoid this fee if the property has been evaluated within the last three months by a professional appraiser.

Real Property Report
Many lenders require a plot plan or survey of the property you intend to purchase. The report confirms the property's boundaries and ensures there are not structures, like fences, in the wrong place. If the property is located in a subdivision in an urban area, some lenders will accept an existing report as long as it was done within the last 5 years. The cost of the Real Property Report is usually the responsibility of the seller, but may occasionally be a buyer's cost, depending on the offer to purchase.

Property Measurement Fee Although every property on the market will have an estimated square footage above grade, you, as buyer, can reserve the right to have the property re-measured to confirm this square footage, at your expense. In the case of purchasing a new home, the price is based on the square footage and the builder will verify the measurements with a set of blueprints.

Condominium Document Check
Since the legislation for a Reserve Fund Study was passed, the need for detailed review of the condominium's financial status is a necessity as a concerned buyer. Hiring a professional company to review the financial statements and budget forecast is an option for you.

Property Inspection Fee
Before issuing a mortgage, some lenders may require a professional inspection of the home. For peace of mind, you may want the home inspected anyway. Regardless of how well we look at a home, few of us have the training to uncover major structural flaws and maintenance problems that are not readily apparent. Ask Grant and Steve to add a conditional clause to your offer to purchase, making it subject to a satisfactory home inspection. It's well worth the cost, which usually is no more than a few hundred dollars. Additional inspections may be required for wood or clay roofs, hot tubs/pools, septic tanks (rural), foundations, etc.

Mortgage Insurance
This is a form of term life insurance that pays off the balance owning on your mortgage if you or your co-borrower dies. Many lenders offer you the option of buying this insurance and adding it on to your monthly payments. You may prefer to protect yourself by taking out your own policy instead. Talk to your insurance agent.

Fire and Liability Insurance
Most lenders require that you carry fire and extended coverage insurance that well exceeds the outstanding balance on the value of the home. You'll want to have fire and weather-related damage protection anyway. Public liability is often included in home insurance coverage and you may want to have this as well.

Title Insurance
When you buy a home, you want to be certain it's safely yours. You can safeguard your investment with an owner's title insurance policy. Ask your lawyer to explain this protection available to you.

Property Tax Credit
In many cases, owners are paying their taxes on a monthly program call the TIPP program. They may have accumulated a credit balance in their TIPP account towards their annual property tax payment which you may have to purchase from them at possession.

Legal Fees
Your lawyer is a key part of your home-buying team. You can expect to pay all legal fees required to arrange the mortgage, as well as "disbursements" - the costs involved in conducting a title search, drawing up the title deed and preparing and registering the mortgage.

Maintenance and Utility Costs
In addition to budgeting for your monthly mortgage and property tax payments, you'll have to budget for the monthly cost of heat, electricity and related costs of your new home.

Other Costs These include the cost of adjustments to property taxes, utility bills, heating, etc, which the seller has already paid and wants credit for the unused portion. To avoid any surprises, ask Grant and Steve to explain each cost you're likely to incur.

Good and Services Tax
Although the Goods and Services Tax (GST) is collected on the sale price of goods and services, it doesn't apply to every type of home sale or every form of real estate service. You will be required to pay GST on some of the fees mentioned above.
As a general rule, purchasers of homes that have been lived in or used do not pay GST on the price of the home. If the home is new and it will be your primary place of residence, you may have to pay GST. However, you may also qualify for a partial rebate depending on the sale price. Grant & Steve can provide you with the information.