So you are paying the rent and living with a roommate.  You and your partner have almost saved up enough money for a 5% down payment on a house.  Your mortgage broker / bank says you need to prove you have a further “1.0%-1.5% for closing costs" – what the heck???  On a $300K purchase, that could be a further $4500!  Where does that money go?

As first-time home buyers, here’s where the extra costs might crop up and why the rules say 5% is not enough…

• There might be $400 for a home inspection to help uncover any structural and mechanical problems with the property before you purchase.
• A property value appraisal may be required by the bank at $300+
• $1,300+ for the lawyer to transfer the property title to you and record the mortgage on title
• Property tax adjustment perhaps $1500 (if the seller pre-paid property taxes, you have to pay them back as much as 6 months' worth)
• Some provinces have land-transfer taxes well into the thousands (~1% or more)
• Property repairs required on move-in?
• Utility connections prior to move-in (security deposits for first-timers)
• Moving costs – consider renting a U-Haul and getting some friends to pitch in.
• Any new furnishings or decorations.
• Maintenance and repair emergency fund - things like the hot water tank or furnace may need replacing unexpectedly (set aside $100/mo in a special account)
• House insurance - $100/month. You don’t want to owe a quarter of a million dollars on a pile of ash after a house fire!