The hidden costs to consider when buying a home

Buying a home for the first time is a fantastic experience. The process seems like it goes by super quickly, but so many homebuyers do not realize some of the expenses of buying your first home. So, we thought it was about time that we took some time to let you know some of the costs that you may face when it is time to put pen to paper. We should note that each sale is a little different, and you might see different or lower costs when it is your time to buy.

Before you take ownership


We all know that you have to put down a minimum for a down payment for a home. But one of the things that you might not realize is that once you put in an offer and it is accepted, it is customary to send a deposit to the seller. Deposits range, but generally, we see deposits between 5-20 per cent of the down payment on the home. In most cases, you will provide a cheque to the other realtor, or you may send an e-transfer or wire the money across. Either way, expect to move a significant chunk of change to secure your offer once it is accepted.

Home Inspection Fee

Whether you are inspecting before you put in an offer or after, a home inspection is a great step to know what you are getting into. Generally, home inspectors will spend a couple of hours inspecting major systems and structures. If you have special features such as a wood-burning stove or pool, it might be worth getting a home inspector that can inspect these features or finding a company to come in and take a look. Home inspectors will usually cover the following areas:

  • HVAC systems, including AC and heating
  • Electrical systems
  • Plumbing
  • Roof
  • Walls, floors, ceilings, doors and windows
  • Basement

The exterior of the house

Most home inspectors will charge between $400 – $1000, depending on the location and size of the property.

Land Transfer Tax

Many homebuyers forget one of the biggest hidden fees is the land transfer tax. Most provinces have a land transfer tax that ranges between 0.5 per cent and 2.5 per cent, depending on the province in which you are buying. For instance, if you buy a home in Ottawa for $500,000, you would have to pay $6,475 in land transfer tax. However, the provinces and territories do not have a land transfer tax for those buying in Alberta, Saskatchewan, Nunavut or Yukon. You will only have to pay a small transfer fee in those areas.

CMHC Insurance

In Canada, if you are putting down less than a 20 per cent down payment, you will need to buy mortgage default insurance. Most buyers utilize the Canada Mortgage and Housing Corporation, but you also have the option to use a variety of private lenders. Either way, that cost will come out on your mortgage between 2.8 per cent to 4 per cent of your total mortgage cost. You will also need to pay the provincial sales tax in some provinces on the total insurance cost as part of your closing package.

Legal Fees

No matter where you buy, there are always legal fees. Real estate legal fees typically cost between $900 and $2,000, depending on the sale location. These fees could include a wide variety of things, including title lookups, verifying the documents and ensuring that there are no liens on the property. Your realtor will likely have a lawyer they usually work with, making the entire process seamless. It is a lot of paperwork and more than a dozen signatures, but a great lawyer will walk you through the process and answer any questions that you may have.

Title Insurance

Title insurance is one of those things that protect yourself and your property from any issues down the line. Most lenders will provide title insurance to protect you from any title errors in public registries or surveys. However, it also can protect you from fraudulently discharged mortgages or any issues with the previous owner’s heirs trying to claim that they own the home. Title insurance costs around $200 – $300.

After you take ownership

Moving Costs

When you buy a house, you will need to move at least some of your things. Many companies can provide a local move for around $1,000, or if you are moving from out of town, costs will start to increase from there.

City Tax

In some cases, you will take possession of a home between taxation periods in the city or municipality. This means you will get a partial tax bill that may be due pretty close to when you take possession. You will also need to ensure that all of the taxes on the property are up to date; if not, you could be left with some work to calculate precisely how much you owe to the city.

Repair and Renovation costs

Depending on your home, you may want to repaint or do some minor or major renovations to the house before you move in. If you are planning these, you will need to account for the cost and build that into what you are expecting to pay. It is also worthwhile to check with the contractor if they accept credit cards or want cash, as that may change how you pay for things moving forward.


Depending on where you are moving, there may be hookup charges for the various utilities in the region. This could include natural gas, electricity, water, sewage and your internet and tv.

Outfitting the home

If you are moving from a small space to a larger home or condo, you will probably need to buy more furniture and décor. Things add up, and many new homeowners have unused spaces for a bit, and that is ok. Good quality furniture is expensive, and with the current long delays due to COVID, it might be good to order now and wait to pay until it comes in.


If you are moving into a new build, most likely, your appliances will not be included in the price. So, try to order as far in advance as possible and be prepared to pay around $4,000 for the fridge, range and dishwasher.

This is not an exhaustive list, but it is a conversation starter. Buying a home is a process, and being prepared for all of the hidden costs will help you be ready for this exhilarating experience.

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Smarter Loans Staff

The Smarter Loans Staff is made up of writers, researchers, journalists, business leaders and industry experts who carefully research, analyze and produce Canada's highest quality content when it comes to money matters, on behalf of Smarter Loans. While we cannot possibly name every person involved in the process, we collectively credit them as Smarter Loans Writing Staff. Our work has been featured in the Toronto Star, National Post and many other publications. Today, Smarter Loans is recognized in Canada as the go-to destination for financial education, and was named the "GPS of Fintech Lending" by the Toronto Star in 2019.