Rights & Money

The Hidden Costs of Home Ownership

If you don’t know what to expect before buying a home, you could be in for some costly surprises

By Matt Smith


Purchasing and owning a home come with a number of costs above and beyond the price you pay that can easily be overlooked. Some of these are one-time fees that occur at or around the time of purchase, while others can add up over time.

Some of the most common fees associated with purchasing property include home inspection and survey fees, as well as legal fees and taxes. A professional home inspection will cost around $500 and is an important step towards revealing future hidden costs.

Buying a new home often means paying GST and/or HST, depending on the location. Municipal and provincial land transfer taxes often apply, and these are based on the home’s assessed value.

If you can’t make a 20% down payment on the cost of your home, you’ll have to buy default mortgage insurance. This protects the lender in the event that you can’t make your payments and is mandated by the government. The banks themselves also sell mortgage insurance, but experts generally advise against this.

There are longer term costs to home ownership that shouldn’t be ignored, as well. In the coming years, one of the most significant of these will be climate change. According to a 2017 survey conducted for Intact Insurance, more than 60% of Canadians don’t factor in risks such as flooding and wildfire when considering the costs of home ownership. Heavy rains increase the risk of water leaking in through poorly insulated windows and doors, and overflowing sewer systems can lead to basement flooding.

Water damage of this nature isn’t covered by basic insurance policies, and it may be impossible to purchase additional coverage in flood-prone areas. Those purchasing in such locations may need to install sump pumps to deal with the risk, which can run well over $2,000. It’s a good idea to speak with an insurance broker about setting up a policy and asking them about the history of any previous claims for the property, as this may reveal problems that could recur in the future.

Photo: iStock.