There has been a lot of talk about how hot the housing market is in Calgary. But what does this mean for the average Canadian looking to buy a home?
Rob Carrick of the Globe and Mail recently reached out to Canadian homeowners to get an idea of what it actually costs to buy a new home. He compiled data he received through emails and social media to come up with the following information. As you can see, home ownership is about much more than being able to make your monthly mortgage payments.
The cost of buying and owning a $400,000 house |
||
| COST OF THE HOUSE | ||
| Total borrowed | $367,200 | $400,000 less a 10% down payment; includes CMHC mortgage default insurance |
| YOUR COST TO BUY | ||
| 10% down payment | $40,000 | Includes land transfer tax, legal fees, home inspection and title insurance |
| Closing costs | $7,000 | |
| Total | $47,000 |
This is what you need to save up |
| MONTHLY COSTS FOR OWNERS THAT RENTERS DON’T PAY | ||
| Mortgage | $1,860 | 5-year mortgage at 2.89%; accelerated biweekly payments have been converted into a monthly cost here |
| Property taxes | $300 | Average of several major cities; you do not necessarily have to pay monthly |
| Home insurance | $65 | You can pay annually or monthly |
| Total | $2,225 | Subtract your current rent from this number to see how much more expensive it would be to own a house on a month-to-month basis |
| SAMPLE OF ANNUAL UPKEEP AND COSTS* | ||
| Basic yard/landscaping | $300 | |
| One visit: plumber/electrician/appliance repair | $250 | |
| Furnace inspection & warranty | $250 | |
| SAMPLE PERIODIC MAINTENANCE/REPAIR COSTS* | ||
| New roof | $4,000 | |
| Replace a major appliance | $800 | |
| Paint exterior | $2,000 | |
| Clean up flooded basement | $3,000 | |
| Redo driveway | $5,000 | |
| New windows & exterior door | $8,000 – $10,000 | |
| Add insulation to attic | $1,000 | |
| New furnace | $4,000 | |
*Rough estimates based on comments from readers and Rob Carrick’s own home. Information taken from Globe and Mail. Recreated for informational purposes only.
To quote ads on TV, that’s not all. On top of the costs listed, there is still the cost of moving and the cost of making immediate upgrades or changes to your home to make it livable for you and your family. If you are moving into a larger home, you will also need more furniture and household items to fill in this larger space.
It is all too easy to forget about these extra costs when we are buying a new home.
Getting a renter, if you have the room, is one way to help lessen these costs but for those with big families or smaller homes, you are left to pay all of these expenses on your own.
Have you ever heard the expression “house poor?” This term is used to describe the situation where a family spends so much on housing costs that they cannot afford other necessities. According to Canada Mortgage and Housing Corporation (CMHC), spending 30% on housing costs is too much and can lead to people feeling strain in other areas.
It’s one thing to afford the various costs of owning a home; it’s another to have money left over for saving and living your life.
