The key cost consideration for any home purchase is the price of the home itself. When you buy a brand new home from a builder, the cost typically includes the base price of the home (and lot) plus the price of any upgrades you choose, from fireplaces to additional landscaping.
In addition, there are other costs that you should be aware of, from legal fees to mortgage insurance premiums, which can apply to a home purchase.
Ask your new home builder and your mortgage lender about the specific items and typical costs that will apply to your situation. That way, you can budget for them and proceed with confidence, knowing that you will not be faced with unexpected last-minute expenses.
When buying a newly built home up to $350,000, purchasers are entitled to a rebate of 36% of the GST, up to $8,750. Between $350,000 and $450,000, the rebate is reduced on a sliding scale, and there is no rebate on homes above $450,000. The rebate can be assigned to the builder at the time of purchase, or you can claim it directly afterwards. Practices vary, so find out up front if the prices quoted by your new home builder are inclusive or exclusive of tax and the rebate.
A high-ratio mortgage (80% or more of the total purchase price of the home) must be insured against default. Home buyers pay an insurance premium that typically ranges from 0.5% to 2.75% of the total purchase price. The premium is based on the size of your down payment and can be paid up front along with your property taxes or added to the mortgage amount.
Your mortgage lender may ask for a property appraisal, depending on a number of factors. For instance, an appraisal is normally needed for a brand new home that's already built.
Your lender may also require a property survey to verify boundaries, measurements and structures, and to identify any easements, rights-of-way or encroachments. Alternatively, title insurance may satisfy the lender's requirements.
If your new home comes with its own well rather than being hooked up to municipal services, your lender may require the flow and quality of the water to be tested and certified.
The purchase of real estate requires the services of a lawyer (or notary) to search the title, draw up mortgage documents, register new ownership and liens and look after other closing details such as disbursement of funds. You may also want your lawyer to review the contract, or sales agreement, between you and the builder before you sign it. Legal costs vary considerably, depending on lawyers' practices and the complexity of your transaction. Get recommendations and spend a little time comparing firms to ensure you get the best value for your money.
Some provincial and/or municipal governments tax the transfer of real estate, often calculated as a percentage of the purchase. Ask your new home builder or your lender about requirements and typical costs in your region.
Your home must be fully insured before mortgage lenders can release the funds for your purchase. This protects both you and the lender.
Determine the amount of work you are willing do yourself, from packing to unloading and setting up in your new home. Contact several moving companies to get an idea of prices and levels of service available. For a more accurate estimate, you can ask a representative to come to your home.
Appliances, furniture, drapery. Does the home come with appliances or will you need to buy new ones? Will you need new blinds and drapery for the whole house? Would this be a good time to upgrade your living room set? It's a good idea to budget for these things in advance. Talk to your lender about financing options that can help you afford the things you need to get started in your new home.
Home maintenance equipment. Do you have the equipment you need to maintain your home properly? Consider your needs throughout the seasons, from lawnmower to snowblower. Will you be able to purchase equipment as the need arises? Can you include it in your initial investment in your home, or will you require additional financing?