Can you afford to buy a home in Edmonton?
Buying real estate in Edmonton is an expensive transaction, but many of the costs lie far below the surface. Before you launch yourself onto the property market, make sure you can afford the move. Those costs can start on the first day you express an interest in moving, and can stretch right across the ownership of your next house. If you take on a project that's too expensive for you, you could leave yourself with years of day to day struggle. A home is supposed to give you security, but it could prove more of a millstone unless you budget properly in the first place.
How much can you spare from your monthly salary?
The first step in looking to buy a new home in Edmonton must involve working out exactly how much you can afford. There's little point in taking on large mortgage repayments if your monthly income isn't going to cover them, so always know what your limits are.
Begin by writing down the exact salary (after all taxes) that will be flowing into your household every month. Deduct all food and travel expenses, along with utilities bills. Any additional debts (personal loans etc.) should also be removed from the total. Then estimate how much you're likely to want for luxuries - going out, clothes, wine etc. Be very honest when making all of these calculations - they'll only come back to bite you later if you're fudging the figures.
What you have left is roughly the amount you can comfortably spend on the house. It's tempting to think that all of this can be spent simply on mortgage payments. Mortgages, though, are only part of the story..
Hidden costs buying residetial property in Canada
It's these that can catch out many buyers, particularly if this is their first time. The costs are hidden partly because they're not that easy to calculate. In Canada, the various taxes will vary from province to province, so there is no exact list of what you will and won't be having to pay. However, here are some of the many costs that can rise up to strike you:
- Legal Costs - You'll always be liable for these. The terms of the offer will need to be reviewed. The mortgage will have to be both prepared and signed. A title search will need to be performed to make sure that the seller really owns the property, and that there are no outstanding encrumbrances. Your new title will then need to be registered against the property, and necessary documentation must be obtained. While it is possible to handle these on the cheap, we really wouldn't recommend it. In extreme cases, you could lose everything if mistakes are made, so use a professional real estate lawyer/notary. Always ask the lawyer for a complete breakdown of costs before you allow them to proceed. Typically, you should expect fees to cost in the region of $1,500 to $2,000, although they can go much higher.
- Property Taxes and Land Transfer Tax - These will vary from property to property, and from province to province. You will need to pay the relevant taxes though, so make sure you know what the damage is, and have taken it into account. Land Transfer Taxes are often payable on the day of the property changing hands. Property taxes may be payable over the course of a year, and could typically amount to around 1.5% of the cost of the property. The good news is that Alberta has one of the lowest Property Tax and land transfers.
- Utility Adjustments - These include water rates, gas etc. The seller of a property will be responsible for paying for all usage up to the day of the sale. After this, the buyer will be responsible. Make sure the relevant companies have the correct details for you when you move in. If you're selling an existing house, ensure that billing to you stops on the day of the move.
- New Construction Transactions - If you're buying a new home, you may be forced to pay warranty fees, depending on the province. Such warranties are compulsory in Ontario, British Columbia, and Quebec. In Ontario, for instance, the mandatory New Home Warranty covers the house for seven years. The costs of such warranties can exceed $3,000, so you must take them into account.
- Mortgage Interest Adjustments - If the first payment date of your mortgage doesn't coincide with your moving day, you'll need to pay extra to cover the interest incurred up to the first payment. There could be almost a month between the two dates, so this might add up to a significant amount. You might also have other costs attached to your mortgage, such as life insurance.
Moving and interior design costs
Assuming you've taken into account all of the above, you may still fail to appreciate how much it costs to move and then settle in your new home. Loading up all of your possessions, and transporting them to the new property will cost money. Once you're in, there are often unforeseen repairs to be made - new light bulbs, leaking taps etc.
Then there's the problem of making your furniture fit into the new house. Will you want new chairs, tables, or beds, for instance? These often aren't top priorities, and you can save up for them over a period of months - or take advantage of the generous borrowing rates that some furniture stores offer. Again, though, these may amount to additional costs that you haven't put in the budget, and that you can't afford.
Finally, most new residential home owners in Edmonton will want to put their own stamp on the property, adding new paint, wallpaper, shelves etc. As with the furniture, this isn't something you'll necessarily need to embark on straight away, and you should avoid the temptation to try and do everything immediately - particularly if your finances are tight. Remember, this is your new home, and you might spend a whole lifetime in it, so resist the urge to run up a big credit card bill simply to make it feel like yours.
Choosing the best realtor in Edmonton at Yeg Agents will help take care of all your needs and questions.