Whether you are considering buying your first home or upgrading to a larger one, there are several expenses that add up to the selling price that you need to plan for when you start your search. These additional costs can take you by surprise and turn signing at the notary into a nightmare if you are not well informed and prepared for these eventualities.
Some of these fees are paid once, others represent a monthly or annual commitment that is added to what you had planned. Not all of these costs apply in all situations, but it is important to know them in advance so that you can establish a realistic and complete budget.
Read the following list of items carefully and make sure you have budgeted well for your next purchase.
- Appraisal Fees
The lending institution may request an appraisal of the property you want, and you will be charged the fee.
- Property taxes
Depending on the cash you give, the lending institution may decide to add the payment of property taxes (municipal and school taxes) to your mortgage payment. Even if you repay them to the current owner in the adjustments at the notary, you will still have to start paying them immediately with your mortgage payment to build up a reserve for the next due date.
- Survey fees
When you buy a property that is older (compared to a new one) the bank may require an updated certificate of location. Unless your promise to purchase has already included it as the seller’s liability, you will have to pay between $1,000 and $1,500 for such a document.
- Property Insurance
Home insurance covers the reconstruction of the building (replacement value) in the event of destruction and insures the contents (fire and theft). Your lending institution will require proof of insurance before releasing the funds for signing at the notary.
- Legal fees
Even the simplest transaction must be duly signed by a notary and registered at the Bureau du Registre Foncier du Québec. Find out about the rates charged by different notaries. The costs will vary according to the complexity of the file and the services offered by the notary.
- Mortgage insurance costs
If you do not have the minimum percentage of cash required to obtain a so-called “conventional” loan from your bank, i.e., less than 20%, you will have to pay an insurance premium for this purpose. This represents between 0.5 and 3.5% of the total amount of the mortgage. Payments are usually added to your monthly payment.
- Mortgage brokerage fees
A mortgage broker has the right to charge a fee for his canvassing work with different lending institutions. However, it is important to “shop around” because many brokers will give you their services for free since the lending institution will pay their fees.
- Moving expenses
The costs of professional moving companies average $80 to $125 per hour for the truck and three men. Prices increase by 10 to 20% during the period around July 1st. Note that if you are moving more than 40 km from your place of work, this may be a profitable choice for you.
- Condo fees
The co-owners must pay monthly fees for the maintenance of common areas, stairs, landscaping, snow removal, etc. These costs vary according to the type of building and the decisions of each Syndicate of co-ownership.
It is important to find out if a special tax, concerning exceptional infrastructure expenses (sidewalks, aqueduct, sewers, paving), applies to the property you are interested in. These infrastructure expenditures can represent thousands of dollars that are added to the municipal tax bill for a predetermined number of years.
- Transfer taxes and others
This tax applies uniformly in all municipalities on the transfer of a title deed, whether property or land. Commonly known as “welcome tax”, it must be paid within 30 days of receipt of the invoice. In certain municipalities and in certain circumstances, a “green tax” may apply in the case of a major expansion, requiring a new cadastre.