TL;DR: besides your mortgage payment, there are other payment obligations you will encounter that should be taken into consideration: property taxes, condo fees, utilities, maintenance, and insurance, plus any other payments/debt you may have or saving you want to do.
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Your mortgage payment isn’t the only cost that you will have to budget for when you become a home owner. Sometimes it is the extra costs that get overlooked and can add up. These extra costs can be impacted by the location of your home, what utilities you need and other factors.
As a home owner, here are some of the most common costs you will have to pay each month:
Home owners in a municipality are required to pay annual property taxes. This revenue for the municipality goes into services like snow removal, garbage removal, recycling collection, police and fire, roads and more. The tax rate is adjusted each year and is a percent of the market value of your home. For example, if your home is valued at $300,000 and the property tax rate is 1 percent, you would pay $3,000 in property taxes per year. Property taxes can usually also be paid monthly by getting payments set up with your municipality.
Condo fees are also referred to as strata or maintenance fees, and they cover expenses for the upkeep of the building and grounds. Condo fees include utility costs for common areas, and depending on the style of condo, may include other utilities like heat/water. Some of the money is put in a reserve fund that the condo association uses for various projects, big and small, that may come up. Be sure you are clear what is and is not covered by your fees before you buy. This will help you understand what other monthly costs you will need to cover.
These are the crucial services that every home owner needs for their property to function. They include power, sewer, water and heating. The costs of utilities can change from home to home and even from season to season. Talk to your realtor to get an idea of what you can expect to pay for utilities. It can help you develop an accurate budget. Once you purchase the home you will need to either connect the utilities or get the account put in your name.
Property insurance is a critical safeguard for your property and can protect you in case of damages like flooding or theft. Insurance premiums are usually paid annually or monthly. How much you pay depends on the package you choose, which defines the coverage you want. Any risks to your property can also impact the amount you pay. This includes:
- where the home is located, as some neighbourhoods are considered more dangerous
- how close the home is to water and what the risk of flooding is
- replacement costs, which refers to how much it would be to replace the dwelling
- construction of the home, such as your heating system, how old your roof is, type of plumbing, etc
Communications and media
Most of us already pay these expenses whether we own our home or rent. When you buy a home, you will need to have these services moved and may face a hookup fee. Most of the time you won’t need to pay more than you already are for your cable, phone or internet, but your providers will probably look at your move as an opportunity to upsell.
Unlike when you rent, any issues that come up when you own a home are your responsibility. You are also responsible for any snow removal and lawn care unless those are included in your condo fees if you live in a condo. While there is no set cost for these things, it is safe to budget at least 1% of the home's value per year. If your home is worth $300,000, expect to spend about $3,000/year on maintenance, on average. There will be years where the maintenance bill will be a lot less - most years, in fact. Then there will be years where you need a new roof, furnace, windows, and/or doors. Those are all big ticket projects and any one of them could cost much more than $3,000 on their own. It is wise to set this money aside for when you really need it. If you are in a condo, most maintenance costs will be handled by the association and come out of your condo fees.