- Hey, welcome back, it's Nolan Matthias, and today we're talking
about all the costs associated with buying a property and getting a mortgage in Canada, everything from the smallest
cost to the biggest, and I think you'll be surprised at what the biggest costs are when it comes to buying a property. And if it's something that you aren't thinking about early on, it can definitely come back to haunt you. And I'll tell you what that is at the very end of this video, so stay tuned to the very end to see that. But before we get into it, for the most honest and
transparent information in the industry, do me that favor, hit that subscribe button,
hit that notification bell, and please hit that like button so more people like
you can see this video. And don't forget about our
race to 10,000 subscribers where one lucky subscriber is going to win their mortgage payment or rent payment for a month just for subscribing to this channel. Okay, so let's get into it. Let's talk about the cost
of purchasing a property and getting a mortgage in Canada. Now some of these are
going to apply to you, some of them aren't, but
at the end of this video, what my hope is, is that you
will have a full understanding of what the potential costs are of getting a mortgage
and buying that property so that there are no surprises. And let's start with GST because GST is something
that most homeowners and most homebuyers aren't
going to get affected by. However, in the event that
you're buying a new home, you will have to pay GST. Now there are GST rebates out there. In order to find out what they are and what the current information is, go ahead and google that. But if you are buying
a brand new property, know that GST is something that you're going to have to account for. Now it's going to be included
in the purchase price of the property, so in a lot of cases, you aren't going to be
out of pocket for it. It just makes up the total
value of the property. But know that buying a new property costs a little bit more
than purchasing one that has already been lived in. Now the second cost associated with getting
a mortgage in Canada, and this is for people who are
putting less than 20% down, and it can be the single
biggest cost for most homeowners is mortgage insurance or
default mortgage insurance. And what default mortgage insurance is is it is protection for the lender when somebody is putting
less than 20% down in case you don't pay your mortgage. Because if you're putting
less than 20% down and you end up not paying your mortgage, it's probably because
the value of the property has gone down and something
has happened in the economy. So what mortgage insurance
does is it protects lenders from the eventuality of
not being able to foreclose and sell the property in order
to make their money back. Now this is an upfront
cost that you pay for. However, it is typically
added to your mortgage, so you aren't out of pocket for it. So if you have basically
a $350,000 mortgage and $10,000 in mortgage insurance, you end up with $360,000 total mortgage. And basically, your payment
just goes up by $45 per month in order to pay for
that mortgage insurance. Now once you've paid it,
you can't get it back, but mortgage insurance is portable. So if you purchase another
property in the future, you can potentially move
your mortgage insurance from the property that you bought now to a new property down the road. Now the third cost associated
with buying a property and getting a mortgage is legal fees because you will need, at the very least, a title insurance company to make the transaction
happen for you or a lawyer. And those fees can range
anywhere from 500 to $2,500 depending on where you are. And typically, it is a higher cost for a higher value property and a lower cost for a
lower value property. We always recommend that when you go to purchase
a property or get a mortgage that you call two or
three lawyers around town and get quotes to see
what they're charging. Don't go necessarily with the cheapest one but go with the one that
has the best combination of a great reputation and a good cost. Now in the event that you aren't
getting mortgage insurance because you're putting more than 20% down, well, often, you are going
to end up having to pay some sort of an appraisal fee. Now there's two types of appraisal fees. There's automated appraisal fees, which typically cost between 70 and $100. And basically, the lenders
use the insurer's systems to basically bounce the
value of the property that you're buying off of
their valuation systems and see if the value makes sense. If it doesn't, they'll send
out a normal appraiser. And if it does, you basically
get charged 70 to $100 and it comes off of the
mortgage at the beginning. Now the second type of
appraisal is a full appraisal, and this costs anywhere
between 300 and $500 depending where you are in the country. If you're buying an
extremely high-end property, they can be even higher than that. And what a full appraisal does is it has an appraiser
actually go through, take pictures, measure the property, and make sure that the
value of the property is 100% what it is supposed to be. Now a lot of people, when they get the bill from an appraisal, they go, "Oh, that's a huge cost." But when you compare it to a $10,000 insurance
premium, it really isn't. The only difference is an appraisal is typically not something that gets added to the
top of the mortgage. Now in most cases, if
you've got 20% down payment, you can afford the 315 to $500
to have the appraisal done but know that that could
be a potential cost for you if you are making that
bigger down payment. And again, that's all
to do with making sure that the lender knows
the value of the property and that eventually down the road, if for whatever reason you
don't make your payments that they're going to be
able to get their money back by foreclosing and selling the property. Now in every province but
Alberta and Saskatchewan, there's what's called land transfer taxes. I'm not going to go into that
in great detail in this video but just go and google your province and land transfer tax to
find out what they are. They can range anywhere from 1% to 2% and they can be quite a
substantial amount of money depending on where you are in the country and what type of property you're buying. Now in Alberta and Saskatchewan, there are land transfer fees but they are considerably
less than a land transfer tax, and they are purely for the purposes of paying for your title to be transferred from
one person to another. Now obviously, when you
go to purchase a property, you need to have some sort of insurance. Typically, fire insurance is mandatory if you're buying a house. If you're purchasing a condo, you aren't necessarily
required to get insurance, although we highly recommend that you get some sort of condo
ownership content insurance because if you don't have
it and something happens or if something happens in your property that affects other units, you can be on the hook for the deductible of the condo corporation's
actual insurance policy or for the costs yourself,
depending on what happened, so make sure that you always
have some sort of insurance. Whether you're buying a
house or buying a condo, you wanna make sure that you're protected. If there's a single takeaway
from this entire video that I want you to take away, it's to make sure that you have insurance. Don't think that just
because you're buying a condo that you are covered. You want to make sure that your contents and any negligence or any
damage that you may cause or may be deemed to have
caused is taken care of. Now another expense is moving costs. Now this can be as
little as nothing, zero, if you do it yourself, to 1,000 to $2,000 if you get professional movers. We find that a lot of people these days are paying the cost of pizza
and beer for their buddies in order to move, and that's
a pretty budget-friendly way to making a move. However, if you own a big property or you have a lot of things or a lot of valuable things to move, you definitely wanna
consider professional movers. Because once you start
to accumulate things once you've been living in a house, it becomes a pretty big pain in the butt to move them yourself, so having professionals who
can lift those heavy things and get things from point A to point B without them breaking,
and can stack a truck because you wouldn't
believe how hard it is to make sure that everything's
stacked in a truck in such a way that it
isn't going to break. Well, that's worth every single penny for a professional mover. Now if you're buying a condo, you're going to have condo fees. You wanna make sure that you
know what those are upfront and make sure that they're accurate. Condo fees cover things
like maintenance expenses, cleaning, snow removal, and
landscaping of the property. And then in certain provinces,
what's called a reserve fund, which is basically the amount of money that is put aside by all the condo owners for future needs and future renovations and future maintenance of the property. Now when you're buying a home, you're also gonna wanna make sure that you get a home inspection done because home inspectors are
worth every single penny. They typically cost between 350 and $500, and they're able to find
the things in a property that you may not recognize
are a potential issue. And a lot of them nowadays
carry infrared cameras so they can find leaks that
wouldn't otherwise be visible. They know their stuff when
it comes to hot water heaters and when it comes to
furnaces and lifespans, and they can potentially save you a ton of money down the road, and they can also be used
as a really great tool to help negotiate the price down if there is anything that is found to be wrong with the property. Now if you're purchasing a
real property or an acreage, you may have a septic or a well inspection that needs to be done. Sometimes that is paid for by the seller. Sometimes it is paid for by the buyers. But understand that it could be a cost associated with purchasing the property. You could also have to pay a survey fee. Now typically, at least in Alberta, survey fees are paid for by the sellers. It's what's called a real
property report, and it's part of the Alberta Real Estate
Association's contracts. I'm not sure about the rest of the country but at least here in Alberta, that is the responsibility of the sellers. Now that is as long as
you're buying a property that is not being sold as is because if you're buying a foreclosure or a bank-owned property,
then all of those costs are basically going to be the
responsibility of yourself. And same thing with condo documents. In most cases, that is the
seller's responsibility. However, if you're buying a
bank-owned or a foreclosure, that could end up being
your responsibility. It all comes down to what's
in your purchase contract, so consult your realtor on that. Now the second to last thing that you're going to have to consider when it comes to purchasing a property and the cost associated
is the property taxes because in a lot of cases, the previous owner may have
already pre-paid taxes. So what you're going to have to do is you're going to have to
pay them back for those. And the lawyers will take care of calculating what you owe the seller if they pre-paid the taxes, but know that there is a possibility that you may have to come up with money to reimburse the seller for
taxes that they've already paid. Now at the beginning of this video, I told you that I would
cover all the costs associated with purchasing a property, and I would tell you at the end what the single biggest cost that most people don't even realize as something they need
to be thinking about is, and that is, dun-ta-ra-na,
the bank's penalty. Because when you go to
purchase a property, depending on the mortgage
you get at the beginning, you are either essentially
agreeing to pay an interest rate for an extended period
of time or a penalty should you decide that
you wanna make a change. And 60% of Canadians actually don't make it
till the end of their term when it comes to getting a mortgage. So if you're getting a
five-year fixed mortgage at a big bank, the single biggest expense you're going to have in all likelihood, and there's a 60% chance of this, so 6 out of every 10 people are going to get stuck with a penalty, is the mortgage penalty. So you need to be thinking
about the long-term strategy when you are getting your
mortgage and buying a property, and making sure that
you're minimizing your risk for a penalty because
the single fastest way that somebody gives their
equity back to a bank when they go to make a
change to their mortgage or when they sell their
property is through penalties. And by the way, the single easiest way to avoid giving your equity to the bank is to always take a
variable rate mortgage. We are a huge believer in those. I'll link to a video on a strategy on why I think that variable rates are the best strategy going forward, but know this, that you pay a premium for a fixed-rate mortgage, and
you also pay a major penalty if you ever wanna get out of one. So if you found this video useful, if you found the information
honest and transparent, which I believe it is, then do me a favor, hit that subscribe button,
hit that notification bell, and please hit the like button so more people like
you can see this video. Don't forget about our
race to 10,000 subscribers. And last but not least, this YouTube channel is made possible by our mortgage brokerage, Mortgage360. So if you're finding
this information useful and you're in the process
of getting a mortgage or buying a home, please
consider us for your mortgage. We can do mortgages across Canada, either through licenses that
we hold in multiple provinces or through industry colleagues that we know across the country. So please, please, please do us that favor and consider us for that mortgage. We'll see you on the next video. Hope you enjoyed this
one, and have a great day. Cheers.
