Owning a home is not cheap, but it could be a good investment over time. If you are thinking about owning a home, you really need to calculate the cost of home ownership, and see if it makes sense for your financial situation. Even though interest rates are very low, there are a lot of other expenses to consider beyond the mortgage.
If you’re coming from renting to buying, you really need to consider the monthly expenses of everything below and see how it compares to what you are currently paying.
The Mortgage
The mortgage, however, is usually the biggest expense that you will have when you own a home. As such, it is important to get the best deal possible on a mortgage. This starts with getting the best interest rate. You should shop around for Canada mortgage rates with ratesupermarket, as it can give you a great look at what interest rates are going for and what you will pay for a mortgage each month.
Beyond just the interest rate, you also want to fully understand the terms of the loan, and any costs associated with it. You don’t want to find out 5 years later that you could owe more than you originally paid.
Taxes
The only sure things in life are death and taxes, and the same thing applies to your home. When you buy a home, you will have to pay property taxes on the home. This expense varies by location, but averages 1-2% of the purchase price of the home.
It is important to remember that most places collect taxes annually or semi-annually. So, although they are only due one or two times a year, you still should be saving for them monthly so they don’t catch you off guard.
Insurance
Now that you own a home, you need to protect it. This means maintaining basic home insurance in case something happens. Whether you want to or not, most lenders require you to maintain home insurance as a condition of the loan.
Your insurance cost will vary based on the size of the home and other features, so make sure you shop around for the best quote.
Utilities
The last thing to remember is the utilities. You will still need to pay for water, power, cable, phone, and more. In fact, you will probably have to pay for more services than when you rented, so be aware.
