The process of buying a home for the first time can be intimidating and confusing, and there are many things to take into consideration before meeting with a real estate agent for the first time. To make sure the process goes smoothly, we’ve laid out the steps to buying property, complete with helpful tips to get your dream home without breaking the bank.
In Part One we take a look at how to correctly budget for your first property.
It’s easy to get so focused on getting your first mortgage that you forget to think about budgeting. Many first time home buyers are excited and forget to consider the costs that are associated with buying a new home. This can result in financial chaos! To avoid this catastrophe, it is essential to add up all of the costs involved in buying and owning a house and, from there, calculate what you can realistically afford to spend on your new home.
The following costs should be considered when creating a competent, realistic budget:
- Down payment – Ensure you have the funds required for a down payment deposit. The deposit may be attained via personal savings, a monetary gift, or it may be borrowed.
- Disbursements – There are many “hidden” fees involved in buying a home. Be sure to take into account legal, home inspection, tax, registration, insurance and home appraisal fees.
- Mortgage Insurance – You may want to consider mortgage insurance if you opt for a high ratio mortgage (75 per cent or more of the property value).
- House and Content Insurance – Include in your budget insurance costs for your possessions and your new home investment.
- Moving Costs – Moving expenses can add up quickly! Your friends may not be able to fit that couch in the back of their truck, so be prepared and take all potential scenarios and details into account.
- Utility Bills – Utility expenses may be new for those who have been previously renting. Expect to pay for connection fees, along with monthly and quarterly bills for your utilities.
- Maintenance and Renovation – Plan for the unexpected! Unforeseen repairs and renovations in your new home can be costly, so make sure to include a little extra budget left for unexpected leaks and breakdowns.
- Miscellaneous Living Costs – Be sure to factor in everyday living costs when considering buying a home. This includes groceries, furniture, vehicle costs.
If you’re buying a condo make sure to consider strata fees, which are monthly payments that cover various building expenses and help build the contingency fund. Strata fees are additional costs that need to be considered as part of cost ownership. Another thing to consider is the cost of parking. Sometimes parking space rentals are separate from the purchase of the unit, so make sure to ask whether or not a space comes with your condo!
For more information on budgeting and buying your first property, get in touch with one of our agents.