The down payment you offer and mortgage you secure aren’t the only substantial costs you’ll be expected to pay when purchasing a home. There are actually a whole range of hidden expenses that accompany the ownership experience.
To prepare yourself, here are eight potential, often overlooked and sometimes ongoing charges you need to consider—arranged in chronological order.
1) The added overhead of home ownership can start as early as the actual buying process. As in, your head says one thing, but your heart says another. Yes, you may have spent endless hours crafting a budget of just how much you’re willing to spend. But then the inevitable happens: you find ‘the one’ and it’s anywhere from $50,000 to $100,000 to even higher above your initial limit. And because of the emotional connection you’ve forged, you bite the bullet and buy it anyway. Or alternatively, you have to extend yourself to win a bidding war.
2) It’s easy to miss when getting caught up in calculating your mortgage, but there’s no avoiding property taxes. Ultimately, you’ll have to divide this annual tax amount by twelve and add it to your monthly mortgage instalments. Consider this too: your property taxes will keep increasing over the years.
3) Don’t forget home insurance either, or all the factors to consider when it comes to acquiring this form of protection. For example, older houses cost more to insure due to how prone to incident the aging electrical, heating and plumbing tend to be. Or you could be in an area where natural disasters are frequent and higher premiums are thereby standard—thankfully that’s not common in the GTA, although summer tornadoes and winter ice storms can be a frequent Ontario occurrence.
4) As much as you love the home you’ve secured—that’s why you bought it, duh!—chances are you won’t be able to restrain yourself from sprucing it up. Or hell, maybe it needs the facelift to begin with. But whether it’s fresh landscaping, new shutters or a paved walkway… it all comes at a price. As do add-ons, like a patio, shed or any extra rooms. On that note, not only will such additions cause your taxes to go up, but the parts and labour can cost a pretty penny too.
5) Let’s not ignore all the pesky maintenance that comes with owning a home. Maybe the driveway needs to resealed? Or the deck restained? Or the gutters cleaned, roof replaced, cracks in the siding repaired and front steps patched? We haven’t even gotten to the interior yet! Once inside, what if the appliances need to be fixed? The filtration substituted? The water heaters drained? There’s always something, and that’s without taking into account that you need to keep your HVAC in running order.
6) There will presumably be some cable, phone and internet wiring that needs to be installed. Yes, the wires on the outside of your home are the duty of the utility company. But you are responsible for any internal work, which means hiring an electrician. And no matter the extent of the job—big, small or somewhere in-between—keep in mind that these fine folks get paid by the hour.
7) Brace yourself for potential nearby construction. Because if you purchased a home with a perfect view… and a new structure gets built in front of you… that’s going to hit you where it hurts. (Your pocket when it comes time for resale.) Incidentally, if other land within reach of yours is zoned for commercial use, you could be at risk for a shopping center or gas station eventually coming along. This would not only make your street a heck of a lot more busy, but also reduce your property’s value. Better make yourself aware of who owns the land around you and what the zoning laws are!
8) A significant hidden expense that few account for comes at the very end of home ownership: buyer demands when you are selling the place. Obviously these can be mitigated if you’ve been diligent about maintenance throughout the course of your possession. But if not, a buyer could very well insist you make expensive adjustments as a condition of the deal. And these extra fees would be added on top of traditional closing costs.
Remember, as expansive as we’ve tried to be, hidden home ownership costs aren’t limited to the above. So please, don’t hesitate to reach out to a PSR agent if you require a fuller scope.