Denise Deveau
Sun
There’s nothing like the excitement you feel when signing your first mortgage — until you start discovering all those extra costs you hadn’t counted on.
Taxes, lawyers’ fees, inspections and surveys are all part of the mortgage picture; and each one carries a price tag that has to be factored into your plans.
Sarah White and her husband Peter Turnbull definitely did their homework before they purchased their first home in Toronto. “We made sure we asked a lot of questions and sat down with a mortgage specialist regularly,” she says.
Even at that, they still discovered that some things cost more than they estimated — like the real cost of repairs to the electrical system and roofing. “We knew they needed to be done — we just didn’t realize how expensive it would actually be,” she says. “We didn’t know about mortgage insurance either.”
One big surprise she discovered was the added expense of a 10-per-cent versus a 20-per-cent down payment. “There’s a huge amount of costs associated with that, so we did all we could to get that 20 per cent.”
Sarah and Peter played it smart when it came down to taking on their first mortgage. Yet according to Anne Marie Froud, a mortgage agent with Invis in Oakville, Ont., “First-time homebuyers usually don’t know a heck of a lot. They often go in before they understand the process and end up getting in way over their heads.”
Legal fees and transfer tax for example are big factors in the equation, since they can run into the thousands of dollars. That’s despite the fact that first-time home buyers may qualify for a rebate on a portion of their land-transfer tax.
“Legal fees are usually between $1,200 and $1,500,” Froud estimates. “And if you don’t have 20 per cent down, you have to pay a 2.75 per cent premium or more through CMHC (Canada Mortgage and Housing Corporation) or Genworth.”
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