When you buy a new property to live in yourself or buying an investment property, there are a number of costs you need to consider to make sure that you can afford the overall expense of owning a new property. These costs go beyond the mortgage payment costs that you incur each month. Property ownership involves two main categories of costs:
Some of the costs you can expect to bear during the purchase of your home:
- Closing costs and other additional costs associated with the home. The closing costs that you pay depends partly on the size of your mortgage, the value of your property and the province where you purchase. For example you will need to consider solicitors fees, mortgage broker fees, any stamp duty that may be applicable to the purchase of your property, survey costs when applying for a mortgage, your deposit payment, property insurance and so on.
- Moving Expenses Whether you hire property movers to pack, move and unpack your belongings or you do it yourself, it will cost you something.
- Costs related to new home Think about what you need and everything you want to feel at home in your new home, especially if it’s your first. Then, think about what you need just to move, e.g. cleaning products. These short term costs are additive, so try to take into account the initial costs.
What are the costs you can expect to pay monthly, quarterly, or sometimes every season:
- The mortgage payment will probably be your biggest regular outgoing towards the cost of your property, whether you have a normal residential mortgage or an investment buy to let mortgage. Several factors affect the amount of mortgage that you make, including: the amount financed, term, rate, type of mortgage product and payment schedule. If you want to pay off your mortgage more quickly and reduce interest costs, you can make payments more frequently, for example bi-weekly (at the same time as your pay). Adding a little to your monthly payments or making an extra payment each year can be extremely useful.
- Property Taxes Depending on where you are, you will receive a council tax bill that is normally paid annually. Nowadays, it is possible to pay property taxes in several ways: by writing a check to the council, by online Banking or if your council allows, automatic debit from your checking account every month.
- Property Insurance Your lender will require that your property is insured at closing, and it is an expense that you can not avoid when you buy the property. The property insurance protects the replacement cost of the structure in case an unfortunate event occurs. Your property insurance should also cover your personal valuables: jewelry, art, furniture and computers, among others. Your property insurance should also cover liability insurance, in case someone gets hurt on your property or you damage property accidentally by a neighbor. (From time to time, make sure your coverage fits with the value of your property.)
- Service Charges If you buy a flat or an apartment, you will undoubtedly be asked to pay a service charge for maintenance of the property inside and outside, including common shared areas used by the public. Ask before you buy all the details on these expenses, among others, from the management company..
- Utilities Each month you will need to pay the heating bill, gas, electricity, water, telephone and cable (or satellite television).
Regular Maintenance. A well maintained property retains a higher market value and contributes to the enhancement of the neighborhood. Proper maintenance can even increase the value of your property. Sometimes these expenses are a little too easy to postpone. But if you neglect certain maintenance tasks, you will find perhaps that repair costs are much higher. A regular maintenance schedule covers a multitude of tasks from mowing to snow removal, through the roof repairs and periodic maintenance of heating system.