When planning to buy a property, several essential costs need to be budgeted for. These initial expenses can range from 1.5% to 3% of the property’s value, according to the National Bank of Canada. It is advisable to have at least 3% of the property value in savings to cover unexpected costs during the transaction.
Key Costs to Budget When Buying a Property
Property Inspection Fees
Inspection fees typically range from $895 to over $1,300 for urban single-family homes. The city of residence can affect these costs. In rural areas, inspection fees tend to be lower. Additional costs of at least $200 might apply for properties built before 1950. Inspecting condos costs around $695, while costs for inspecting small multiplexes can vary.
Notary Fees
Notary expenses range from $2,200 to over $4,000 when purchasing a property priced between $500,000 and $1.5 million. Fees vary by notary and can depend on whether they charge hourly rates or use flat fees. Urgent cases will incur higher charges as well.
Property Evaluation Fees
Property assessment fees vary from $350 to over $800. Lenders often require these assessments to ensure the property value is appropriate for the purchase price.
Mortgage Insurance Premiums
This insurance is mandatory if your down payment is less than 20% of the purchase price. Issued by the Canada Mortgage and Housing Corporation (CMHC), the premium varies according to your down payment amount. Additionally, a 9% sales tax applies, with plans for an increase in 2027.
Welcome Tax
The welcome tax, or transfer duty, is based on a percentage of the property’s price or its municipal evaluation. The rates include:
- 0.5% on the first $62,900
- 1% from $62,900.01 to $315,000
- 1.5% on amounts exceeding $315,000
Municipalities may set rates above 3% for properties over $500,000, with exceptions like Montreal.
Sales Taxes on New Homes
Newly built properties are subject to a total sales tax of 14.975%, comprised of a 5% federal Goods and Services Tax (GST) and 9.975% provincial sales tax. Some buyers may qualify for partial refunds on these taxes under specific conditions.
Moving Costs
Moving expenses range from $50 to $250 per hour, depending on the moving company and timing. Average total moving costs can be between $1,500 and $2,000.
Other Potential Costs
Besides the above-listed expenses, anticipate costs for renovation projects, home insurance, utility bills, municipal and school taxes, and, if applicable, condo fees. Planning ahead can help you budget effectively and avoid surprises after purchasing your new home.
