Whether you plan to purchase a condo to make it your home or keep it as an investment opportunity, there are many factors to keep in mind – aside from the initial purchase price and monthly mortgage payments. To help you prepare, we've compiled a list of key expenses you should include in your budget before making a purchase.
Maintenance Fees
Condo maintenance fees cover building costs such as utilities, insurance, garbage collection, and shared amenity upkeep like fitness centers, pools, and lobbies. These fees typically range from $50 to $1000 per month depending on the size and age of the building and the amenities included.
Closing Costs
These are additional expenses that account for 1.5% to 4% of a home’s purchase price. They are typically paid when the property title is officially transferred from the seller to the buyer. Closing costs often include the following:
- Property Appraisal
A property appraisal fee covers the cost of getting your home professionally evaluated and having its market value estimated. This may cost around $400 to 500; however, this varies depending on the appraiser and your location.
- Home Inspection
Home inspection costs in Canada range from $350 to $600, depending on the property's size, age, and location. Home inspection is key in checking the home's condition before purchase, so choosing a qualified home inspector is crucial.
- Homeowners Insurance
This is a form of property insurance that protects against any losses and damages to the condo unit and/or any assets in the condo. This is typically a separate cost, unless you’re buying new or pre-construction which will come with a New Home Warranty insurance. New Home Warranty insurance generally includes deposit insurance and protection against defects in work and materials as well as major structural defects.
- CMHC Insurance
If you’re making a down payment of less than 20% on your condo, you'll be required to pay CMHC Insurance, a separate expense added to your monthly mortgage payments, usually calculated as a percentage of your down payment. For example, down payments between 5% and 9.99% require a 4% premium, while down payments of 15% to 19.99% require a lower premium of 2.8%.
- Land Transfer Tax
Land Transfer Taxes can amount to a large sum of money depending on where you’re buying, and are often calculated as a percentage of the property value. Keep in mind that in some cities such as Toronto and Montreal, a municipal tax is added to the provincial land transfer tax. Luckily, first-time buyers may be able to qualify for a Land Transfer Tax rebate to help offset this cost.
Lawyer Fees
Lawyer fees will depend on your purchase price and the lawyer you choose to work with. Lawyers will be key to helping you navigate the contracts, appraisals, inspections, and the legal documents involved in the condo buying process. Fees can range from $1,000 to 3,000.
Property Taxes
Condo property taxes are used to maintain the needs and services of the community, including garbage pick-up, fire protection and maintenance of public spaces. This cost depends on where you choose to buy and could also vary based on the development.
Title Insurance
This provides coverage for the home owners’ rights of ownership, including fraud, forgery and missing heirs. In Canada, this insurance typically costs between $150 to upwards of $400 and is purchased through your lawyer.
As a buyer, you’ll want to have a good understanding of how these costs can impact your overall budget and affordability so that you can ensure you’re setting yourself up for success. At Homewise, we are dedicated to guiding our clients in the right direction – whether they’re just starting their home search or looking to lock in a mortgage. Our team of expert real estate agents and mortgage advisors are just a click away. Apply online in just five minutes and we’ll be in touch.
Start budgeting your closing costs with the help of our closing costs calculator today!