Francis and Angela knew that buying a new home was a big financial commitment, but they'd been saving for a year, and with their parents' help they had $30,000 they could spend. The house they wanted would cost $225,000, and they wanted to renovate the kitchen and bathrooms to make them more modern.
"The down payment on the mortgage, including mortgage insurance, is over $17,000," Angela said, "and all the fees will be another $4,500 at least."
"$4,500! Where did that come from?" Francis asked.
Angela showed Francis a list of expenses:
|Hook-up costs (cable, phone, internet)
"And there's sales tax on all the fees, too," she pointed out. "All together, it'll be over $5,000." Francis added a few items of his own.
|New gardening and maintenance tools
|Drapes for windows
Angela added it up. "Including the down payment, we're spending over $22,000 before we even start. We have about $8,000 left, and there are probably more expenses we haven't thought of yet."
"I don't think we can do the renovations we want for $8,000," Francis said.
"You're right," Angela agreed. "Maybe we can paint the rooms ourselves, and put off the renovations until later."
* Note: Fees and taxes differ among provinces and territories. For example, while most provinces charge a land transfer tax such as Quebec's taxe de mutation, Alberta, Saskatchewan and rural Nova Scotia do not.
Lessons Francis and Angela learned:
- Buying a home involves many large and small costs.
- Planning your buying and moving costs in advance helps you get a realistic estimate of the total costs.
- Be prepared to adjust or delay your plans to fit your budget.