One of the main concerns to first-time buyers is to know the typical expenses of owing a home besides the mortgage. Below are typical expenses to give you a better idea.
Gas, Hydro and Water: You have to pay gas monthly, hydro every two months, and water every four months. These expenses will depend on your usage level. If your home is new, you will pay less hydro and gas expenses since new homes have better insulation. If you are going to buy a resale home, it is a good idea to ask the owner to estimate these expenses.
Maintenance: Maintenance cost depends on the age of a house, the older the house the higher the cost. You should prepare to pay small maintenance cost frequently. Besides, you should also have a saving fund for unexpected repairs and replacement of the roof, heating equipment, air conditioning, fridge, washer, dryer, etc. These things need replacement at least a few times over the life expectancy of your home. The fund can also be used for unpredictable damages such as leaking walls, ceilings or basement flooding.
Insurance: You will have to pay home insurance for the property before the paperwork completes since the bank will not release the money if you don’t have proof of fire and extended coverage insurance. Home insurance varies across insurance companies. You should shop around to get a reasonable policy. Similar to car insurance, home insurance can be slightly higher for first-time buyers, because the insurance company considers them having lack of maintenance experience, therefore posing higher risk.
Property Taxes: Property taxes are calculated based on your home’s assessed value and the local tax rates. The assessed value estimated by the municipality may be slightly lower than its market value. The reason is the municipality wants to avoid possible litigation expense. It will instead adjust the tax rates yearly to get enough budgets. Property tax rates not only vary from region to region but also fluctuate yearly. For example in year 2010, the property tax rate for residential properties in Toronto is 0.8305702% but 1.704499% in Oshawa, more than twice of Toronto. You can ask the owner or your real estate agent to obtain information on a specific property.
Condominium Fees: If you live in a condominium, you have monthly maintenance fees to pay but they can vary, depending on what expenses the fees cover. The fees are most likely calculated based on the number of square feet of your unit in the condominium. Fire insurance for the condo is normally included in the fees, but you have to buy insurance for your own contents.
