Buying a home is not as easy as closing your eyes and opening it to find yourself in a magnificent house located in a cozy neighbourhood. Having set aside enough funds to make a down payment, agent fees and perhaps some miscellaneous costs, best believe you are unlikely to have factored all the hidden costs of a home purchase.
Still in disbelief? Read on.
Be Prepared To Pay For Land Transfer Tax
Ever heard of the land transfer tax? This is the amount of money you pay to the government as tax when you acquire a property. Although it mostly forms the greatest portion of your closing costs, there are government-sponsored rebates that you could use to your advantage.
Most people aren’t aware of the fact that they’ll have to pay for land transfer tax, which is often an approximate value of 1-2% of the property value. Many buyers are astonished when they find out about this requirement. It’s a smart move to calculate the potential price of your land transfer tax, and find out how much you can get off of it via rebates
A good lawyer can help you navigate through some common legal issues associated with home purchase, such as unfavorable brokerage agreements. How else would you know when to get out of a home negotiation process that could land you in serious trouble later on? Professional services do not come cheap, and this is why you need to set aside an extra $1,000- $2,000 as fees for your lawyer.
House Inspection Costs
Before finalizing the purchase of your house, be sure it’s in good condition. While an informal inspection by you is recommended, professional home inspection is usually the best way to achieve this. Professional inspectors are trained to look for any defect in the structure of your building, roofing, plumbing, electrical, cooling/heating systems, floor surfaces. Especially if you are a first time home buyer, a good professional home inspector is invaluable in helping you purchase a solid home. Setting cash aside (typically around $500) for this purpose is highly necessary.
Think it’s all over after you’ve made your purchase? Not so fast! For the first 6 months after buying or moving into your new house, you are likely to discover aspects of the house which you aren’t pleased with, and which you’d have to renovate. Even the best of purchases are often laced with a couple of these ‘not-so-perfect’ areas, so you should plan for it. With this in mind, it is wise to set aside a significant amount to cover renovation costs.
Don’t be so excited, or so much in a hurry, that you fail to take into consideration, the above hidden costs when buying a house. The aftermath of these decisions stay with us much longer than we like to admit, after all.