The Costs Associated with Homeownership

How Much Does Home Ownership Cost?

If you’re convinced that homeownership is for you, the next step is taking a detailed survey of the real financial obligations of homeownership. Use these guidelines to estimate the real financial responsibilities of buying a home.

• Down payment: 5 to 20 percent
  This is the standard amount you’ll need to apply for a mortgage. If you put down less than 20% of the purchase price, you’ll have to pay a mandatory mortgage default insurance policy.

• Closing costs: 1.5 to 5 percent
  This includes lawyer fees, appraisal fees, home inspection fees, and property tax adjustments. Appraisal fees are calculated by your mortgage lender in which they will appraise the property you purchased and ensure it's worth more than you are borrowing. Property taxes vary depending on the municipality and the assessed value of your property.

• Home insurance: $50 to $100 per month
  A home is an enormous investment. You’ll want to protect it.

• Maintenance: 1 to 2 percent of your income annually
  A new hot water heater, roof repairs, blown electrical circuits – you name it! Homes need regular, expert maintenance if they are going to be safe and efficient. Regular upkeep also protects your resale value.

A note for first-time homebuyers: Incentives like the RRSP Home Buyer’s Plan, the First Time Home Buyer’s Tax Credit, and the Land Transfer Tax Rebate can all save you a bundle.

If you have the resources to buy, homeownership is a great investment. Every time you make a mortgage payment, you are essentially paying down the principal and taking a step towards owning a piece of property that will appreciate over time. Think of your mortgage payment as an investment or a savings strategy: if you sell your house down the road, you’ll not only get back the money you’ve paid out but also likely turn a profit.

Of course, there are no guarantees and even buying a house comes with risks, but for the most part, buying a house in Canada is a safe bet. Just make sure to buy within your budget and plan to hold onto the place for more than five years.

One thing to do before investing is considering the ongoing expenses. Once you become a homeowner, you only have more financial obligations to consider (i.e., mortgage payments, property taxes, utilities, etc.). By planning ahead of time, you can create a financial plan that will protect your investment for the years to come.