The Hidden Costs when buying a Home

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Homebuyers want to take action to avoid costly surprises and budget for any of the extra expenses. While coming up with a minimum deposit can be challenging it is also important to be aware of the 'hidden costs' of buying a home.

A general rule for buyers would be to budget for a 'cash' deposit of at least 5% on resale properties, which is payable when the subjects are removed and the sale is firm. For new strata developments, the deposits required could be up to 20%. If you don't have this amount of cash you may need to obtain financing just to cover the deposit.

Buyers should prepare and budget as much as possible ahead of time, especially noting that the provincial property tax, which is 1% on the 1st $100K, 2% on the balance up to $2,000,000 and 3% on the balance over $2,000,000 will be one of the largest expenses to plan for.

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Hopefully, before heading out to buy a home, buyers will sit down with their Realtor and discuss the process and outline the costs at each stage of the buying process, so they can budget and prepare for these expenses.

It would also be helpful, when your Realtor prepares an offer on your behalf, they outline the extra costs again as a reminder so you can consider all the costs when negotiating the price.

You will also want your Realtor to discuss timing the completion dates with mortgage-renewal dates, and budget for and what completion dates work to minimize penalties and extra costs. Often, buyers could 'port' (transfer) their current mortgages to their new property which will avoid a  penalty for paying off their loan early, which can be expensive.

The Real Estate Board of Greater Vancouver has a list to help homebuyers budget for extra or unexpected costs.

Good luck and happy buying. It should be an exciting process!


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