Initial purchase costs when buying a home

Purchasing real estate can be a costly endeavor indeed. For many, a home purchase becomes very stressful financially. That usually happens because the buyer is unaware of some of the expenses they will incur, and therefore, is unprepared. Here’s an overview of practically everything that could come up during a home purchase in Saskatchewan. Please note that all costs are approximate.

Down Payment – You should be aware that your lender would insist that you put a little money into your home purchase from the start. You’ll need somewhere between 5% and 20% of the purchase price, depending on your personal circumstances.

Appraisal Fee – Your lender may want to order an appraisal on the property you purchase to ensure that you’ve agreed to pay a fair price for the property and that they are not lending too much money on the home. The approximate cost of a lender ordered appraisal is $200 to $300 and can go much higher for exceptionally large properties, or properties located outside of the city.

Mortgage Application Fee – In the past, many lenders have charged a mortgage application fee to process your request for financing. Most major lenders have stopped doing so. It shouldn’t take much shopping around to find a lender that will not charge. This fee was typically between $75 and $150.

CMHC Application Fee – If you are planning on taking a high ratio mortgage (down payment of less than 20%) you’ll have to pay a CMHC application fee of $235. However, this fee does include your appraisal, if one is deemed necessary. Additionally, you will be charged an insurance premium that ranges from .5% to 3.75% of the mortgage amount. However, this fee is usually added to the total mortgage amount as opposed to being paid up front.

Home Inspection Fee – Don’t you dare close that deal without the help of a qualified professional building inspector. Please read our article on the importance of home inspections and budget $375 to $500 for this expense. Again, this expense can potentially be higher for exceptionally large homes, or properties located out of the city.

Home Insurance – Your lender, and your common sense will require you to purchase insurance to protect yourself against a loss due to fire or other types of tragedies. You will also likely want to protect the home’s contents. A home insurance policy can cost as little as $400 and will increase in relation to the value of the home you’re purchasing and the value of your personal effects. An insurance broker can give you a good idea of how much you should budget. Just let them know how much you plan to spend on a home and the approximate value of your personal belongings.

Land Transfer Tax – At the present time there is no land transfer tax in effect in Saskatchewan.

Utility Connections – Budget approximately $200 for various utility connections.

Adjustment Costs – There may be certain adjustment costs that apply to your purchase that you should be aware of in advance. The seller may have already paid the local property taxes beyond the date of possession. In such cases, the buyer will reimburse the seller on a pro-rated basis, from the date of possession to the end of the tax period. You may also be required to pay the seller an interest adjustment on any portion of the purchase price not received by the seller at possession. The Saskatchewan Land Titles system commonly takes up to week for titles to transfer and can take longer where title errors occur. The seller will not receive the purchase funds until after the title transfers and is customarily compensated with an interest adjustment.

Registration of Title – You must register your title with Saskatchewan Land Titles. This cost varies depending on the home’s value. It costs $2 per thousand of the purchase price, plus $20. Typically performed by a lawyer and billed to you as a disbursement.

Mortgage Registration – If you are taking a mortgage to finance a portion of your home purchase, the lender will require that the mortgage be registered against the property. This cost varies depending on the amount of the mortgage. It costs $2 per thousand plus $20. Typically performed by a lawyer and billed to you as a disbursement.

Other Disbursements – The lawyer that handles your purchase will want to search the property’s title and perform a tax search to ensure that you receive clear title to the home. They will charge back any expense that is incurred on your behalf to close the transaction including photocopies, courier expenses, etc. These “other disbursements” are typically in the area of $90 to $150.

Legal Fees – The lawyer’s fee obviously varies with the amount of work a given file requires. They will usually charge a fee of $500 to $700 to register the property title. If there is a mortgage, the lawyer will charge a similar fee to prepare and register the mortgage against the title of the property.

Surveyor’s Certificate or Real Property Report – Lender’s usually require one of these reports to verify that the buildings situated on the property are all located within the boundaries of the property. In many cases the seller will have a property survey in their possession. Always request that the seller provide one in your offer to purchase. If the seller is unable or unwilling to provide one they can cost $400 to $500.

Moving Costs – If you decide to hire a professional mover there will obviously be additional costs involved that will vary significantly depending on the distance of the move and the amount of property to be moved. Call a few movers for a quote.

Generally, budgeting 1.5% of the purchase price of your home for incidentals and closing costs will provide sufficient funds to cover your expenses.

Other helpful articles related to cost of purchasing a home

Down payments and mortgage insurance
Ongoing costs of home ownership
Is your move tax deductible?