What you can do to prevent bills from climbing when moving into a new home
Angel Ilnisky was paying the rent and living with roommates, so she carefully saved up enough money for a five per cent down payment with her partner, Michael Nicholson.
The 29-year-old respiratory therapist at the Alberta Children's Hospital and her 31-year-old oilfield driller partner worked hard to save, but the pair of first-time homebuyers quickly realized there would be plenty of other costs involved with buying their new home in Scenic Acres in northwest Calgary.
There was $300 for a home inspection, $1,000 for the lawyer - the hidden costs of home ownership began to mount.
"You know there are going to be things that come up," Ilnisky says. Luckily, some hail damage to the roof was covered by the previous owner's home insurance, so it was totally replaced when they bought it - one less cost to worry about.
They also avoided $800 in moving costs by not hiring a company and doing it themselves by renting a U-Haul and getting some friends to pitch in.
"Thank God for good friends," she says, adding free pizza and beer helped entice enough hands for the actual move-in day in September. A few items didn't make it, but once the truck was unloaded, it suddenly dawned on them that room in a new house meant not enough furniture to fill the space.
Things such as furniture, decorations and electronics will all come with time. Studies show the first year of home ownership is especially costly, according to Tom Bzowey, vice-president of home and auto insurance for RBC Royal Bank.
"Especially for people buying their first home, there always seems to be unanticipated costs," Bzowey says.
More than half (56 per cent) of people in a recent RBC Insurance poll said they aren't confident they will be able to completely furnish their new home during the first month and 44 per cent said they are unsure what the total costs will be to settle into their new home.
Aside from getting friends to help with the move, there are other ways to prepare for the hidden costs of buying a new home and to save where possible.
Bzowey recommends that buyers create a checklist by going through every added expense in addition to the actual property and work it into the budget. By saving in advance and by planning for these costs, buyers can save that money before they buy and avoid any nasty surprises.
A buyer's hidden costs - whether it's their first home or third home - tend to be quite elevated for the first couple of years.
"We really encourage people to just get on top of that before they move so they don't have any stress associated with . . . all of that kind of stuff," he says.
Ilnisky and Nicholson bought a newer home they can keep for years instead of a typical starter home, but they are both still aware that things like the hot water tank or furnace may need replacing unexpectedly - adding potentially even more costs associated with home ownership.
"We wanted to make sure we had a backup fund just in case anything like that happens," says Ilnisky, who shopped around for things such as life insurance, comparing prices and offers on everything from lawyers to home inspectors to insurance.
She also took advantage of an offer through her bank with RBC Insurance that allows her to delay payments on her home insurance for a year, but still gives her full coverage. "You shop around the find the best deal, but . . . with them putting off the insurance for the first year, it's one less expense," says Ilnisky, who bundled it with her other investments to bring the total cost down.
Bzowey also advises buyers to remember the non-monetary, emotional costs associated with the inherent stress of buying and then moving into a new home.
"The way that breaks down to dollar and cents is that it is stressful and any time we're under stress we're vulnerable to missing some of the details," he says.
If you don't plan in advance for the costs of buying, aside from the home, then you leave yourself open to problems that could potentially derail your homebuying plans.
Knowing in advance what you can qualify on for a mortgage is only a starting point; you need to take every cost into consideration.
Some practical tips beyond the purely financial elements to buying a home include shedding some old junk when you move by donating unused items, along with making some boxes marked to open first that include important financial documents and basic things you need throughout the day.
No matter how many details there are to deal with, Ilnisky says she would take the plunge into home ownership again if she had to do it all over.
Additional costs to consider when buying a home:
Home insurance is often required by your mortgage lender and provides protection against loss or damage of your property and its contents and liability claims.
- - Life insurance and any related types of insurance (such as disability or critical illness) helps ensure money is there to pay the mortgage if something happens to your spouse or loved one.
Mortgage loan insurance is required if your down payment is less than 20 per cent of the purchase price.
Appraisal fees may be required if the lending institution requests that your property be appraised.
Legal fees include reviewing the offer, drawing up the title deed, conducting a title search and preparing and registering the mortgage.
- - A property survey may be required to verify the location of the property's boundaries, measurements and structures and any registered or visible easements or encroachments on the property.
- - A home inspection could help evaluate any structural and mechanical problems with the property before you purchase.
- - Furniture is the most obvious additional move-in expense, as people buy new items to go with their new space and are usually made over the first one or two years
Top priorities of new homeowners:
- - Top new home purchases are window coverings (59 per cent), home furniture (53 per cent) and decorating supplies (36 per cent). Luxury items like a pool table (one per cent) or hot tub (five per cent) are much lower on their list.
- - Almost all of those surveyed (91 per cent) agree that moving costs can result in more stress than unpacking or adjusting to a new neighbourhood.
- - More than three-quarters (80 per cent) of Albertans expressed excitement about getting a fresh start.
- - Almost three-quarters (72 per cent) of women and 60 per cent of men would be excited about organizing their new home.
Source: RBC Royal Bank
Bzowey also advises buyers to remember the non-monetary, emotional costs associated with the inherent stress of buying and then moving into a new home.
"The way that breaks down to dollar and cents is that it is stressful and any time we're under stress we're vulnerable to missing some of the details," he says.
If you don't plan in advance for the costs of buying, aside from the home, then you leave yourself open to problems that could potentially derail your homebuying plans.
Knowing in advance what you can qualify on for a mortgage is only a starting point; you need to take every cost into consideration.
Some practical tips beyond the purely financial elements to buying a home include shedding some old junk when you move by donating unused items, along with making some boxes marked to open first that include important financial documents and basic things you need throughout the day.
No matter how many details there are to deal with, Ilnisky says she would take the plunge into home ownership again if she had to do it all over.
Additional costs to consider when buying a home:
Home insurance is often required by your mortgage lender and provides protection against loss or damage of your property and its contents and liability claims.
- - Life insurance and any related types of insurance (such as disability or critical illness) helps ensure money is there to pay the mortgage if something happens to your spouse or loved one.
Mortgage loan insurance is required if your down payment is less than 20 per cent of the purchase price.
Appraisal fees may be required if the lending institution requests that your property be appraised.
Legal fees include reviewing the offer, drawing up the title deed, conducting a title search and preparing and registering the mortgage.
- - A property survey may be required to verify the location of the property's boundaries, measurements and structures and any registered or visible easements or encroachments on the property.
- - A home inspection could help evaluate any structural and mechanical problems with the property before you purchase.
- - Furniture is the most obvious additional move-in expense, as people buy new items to go with their new space and are usually made over the first one or two years
Top priorities of new homeowners:
- - Top new home purchases are window coverings (59 per cent), home furniture (53 per cent) and decorating supplies (36 per cent). Luxury items like a pool table (one per cent) or hot tub (five per cent) are much lower on their list.
- - Almost all of those surveyed (91 per cent) agree that moving costs can result in more stress than unpacking or adjusting to a new neighbourhood.
- - More than three-quarters (80 per cent) of Albertans expressed excitement about getting a fresh start.
- - Almost three-quarters (72 per cent) of women and 60 per cent of men would be excited about organizing their new home.
Source: RBC Royal Bank
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