When you’re ready to buy a home, it’s important to know what costs to expect. Various fees and taxes go into the final purchase price of a home, and being prepared ahead of time can help make the home-buying process go more smoothly.
Homebuyers in Canada Should know about these hidden costs:
1.Closing Costs
When you’re buying a house in Canada, there are a lot of hidden costs that can add up. One of the highest hidden costs is closing costs.
Closing costs are the fees your lawyer, notary, or other professionals charge when you’re buying a house. They can add up to several thousand dollars, so it’s essential to be aware of them before you start the home-buying process.
The good news is that you can negotiate who pays the closing costs. The seller may be willing to pay some or all of the costs, or you may be able to get a lower interest rate from your lender if you agree to pay the costs yourself.
2.Transfer Taxes
When you’re buying a house in Canada, there are a number of costs you’ll need to factor in beyond the purchase price. One of these is the transfer tax, which is a tax charged by the province or municipality when you transfer property ownership.
The transfer tax you’ll need to pay will vary depending on the province or territory you’re in, but it’s typically a percentage of the purchase price (usually between 0.5 percent and two percent). So, on a $500,000 home, you could be looking at a transfer tax bill of $2,500 to $10,000.
In some cases, the transfer tax may be included in the home’s purchase price, so it’s essential to ask your real estate agent about this before you start the buying process.
3.Inspection Fees
One of the most unexpected expenses can be inspection fees. While most homebuyers are aware that they’ll need to get a home inspection before closing on a property, many don’t realize that there can be additional fees for things like radon testing, septic tank inspections, and more.
In addition to the cost of the actual inspection, there may also be fees for the report itself and any necessary repairs discovered during the inspection. All these costs can add up quickly, so it’s essential to be aware of them before starting the home-buying process.
Radon testing is one of the most common inspection fees, and lenders typically require it to get a mortgage. Radon is a naturally-occurring gas that can be found in the soil, and it can seep into homes through cracks in the foundation. While it’s not harmful in small amounts, long-term exposure to high radon levels can be dangerous.
The cost of a radon test varies depending on the size of the home, but it typically ranges from $100 to $200. If the test results come back positive for high radon levels, there may be additional costs for remediation, ranging from a few hundred to a few thousand.
Septic tank inspections are another common inspection fee, and they’re typically required when buying a home that’s not connected to a municipal sewer system. The cost of a septic tank inspection varies depending on the tank size, but it typically ranges from $250 to $500.
If the septic tank inspection reveals that the tank needs to be pumped or repaired, additional costs will be involved. Pumping a septic tank typically costs between $300 and $500, while repairs can cost anywhere from a few hundred to a few thousand.
Final Thoughts
There are a number of hidden costs associated with buying a house in Canada. These costs can include things like land transfer taxes, home inspection fees, and legal fees. It’s essential to be aware of these costs before you start the process of buying a home so that you can budget accordingly.
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