When you own a home, you’re still paying for all the same stuff, but it’s all separate, and you need to stay on top of it…or else.
We’ve put together this list of new expenses for first-time buyers so they’re not caught by surprise when it comes time to pay the bills!
1) Mortgage payment This is the obvious one – it’s like paying rent but you’re paying the bank (or another lender) instead of a landlord. Some homeowners set up monthly payments while others prefer bi-weekly. It’s totally up to you and what you decide with your bank or lender.
2) Internet and cableNot all rentals come with this service bundled, so there’s a chance you have experience setting this up and remembering to make payments. You likely already have a cell phone you’re paying for on a monthly basis, so this one isn’t too shocking either. Do young people still watch/pay for cable TV? We assume Netflix is your go-to streaming service.
3) HydroMany rentals include hydro in the monthly rent, so there’s a chance you haven’t had to pay utility bills before. If you’re buying a low-rise house, expect to receive a water bill too. The more you use energy and water, the more you pay. A benefit of living in a condo is that water services are provided by the entire building, so it’s included in your maintenance fees…
4) Maintenance fees
…Which brings us to this expense. Yes, the benefit of living in a condo is that there is no exterior maintenance, but there are maintenance fees (or condo fees) that are due each month that go towards the upkeep of the exterior and common areas. In Toronto, expect to pay more than $0.50 per square foot every month.
5) Property taxesIn Toronto, your property taxes consist of a City levy, an education levy, and City Building levy. For example, if your property is assessed at $300,000, then you’ll owe just under $2,000 for 2017.
These funds go towards police services, TTC, debt charges, fire services, Toronto Community Housing, parks, libraries, social and children’s services, paramedic services, and other aspects of City operations and public services.
6) Home insuranceIn Canada, home insurance isn’t required by law, but it’s crazy not to have it. Your home is the most expensive and valuable thing you own, you should do all you can to protect it from minor damage to complete destruction. Home insurance is usually a monthly payment and you can likely find an option to lump it in with your car insurance (if you’re one of those rare millennials with a car).
7) Repairs and upgradesIf your fridge breaks down in your rental through no fault of yours, it’s up to your landlord to repair or upgrade it. That goes for all appliances and finishes in the home. When you own, all this responsibility and cost is on you. If something breaks or you need to upgrade your furnace because winter is coming, then you better be able to afford it!
We hope this list helps you prepare for homeownership!