Monthly Carrying Costs When Buying a Home

Property taxes are a major source of income for municipalities across Canada, and are used to help pay for services, such as:

• Snow removal
• Garbage removal
• Fire protection
• Recycling collection
• Policing
• Road maintenance
• Street lighting

Each municipality determines their own tax rate every year. Due to this, it’s difficult to keep an accurate list of every rate. That said, generally property taxes will be 0.50-2.50% multiplied by the market value of your home. The resulting amount is billed to you once per year.

For example, if your home is assessed at a value of $400,000, and your property tax rate is 1.00%, then your property tax bill would be:

Learn more about how to pay your property taxes, and how being a new homeowner affects how much property tax you owe, by visiting our property tax page.

Condo fees (also known as strata or maintenance fees) are mandatory fees paid to cover a wide range of expenses. Generally, condo fees will cover your utilities (or part of them), contribute to the condo association’s “reserve fund” and pay for maintenance of the common areas and the exterior of the condo building.

Condo fees can vary from building to building, but in Toronto, the average is estimated to be $0.50 per square foot6. It’s important to find out exactly what is not covered by your condo fees before you purchase your condo, so you know which additional monthly costs you are responsible for paying. When you view a condo, your realtor should provide you with a fact sheet that includes your monthly condo fees. Here’s an example of condo fees for some buildings in Toronto:

Building	Address	Condo Fees/Square Foot	Average Price of 1-Bedroom	Average Square Footage of 1-Bedroom	Estimated Condo Fees for 1-Bedroom	Fees Cover
The Ritz-Carlton	183 Wellington St W	$0.98	$913,666	1,368	$0.98 x 1,368 = $1,340.64	Common element maintenance, heat, water
The Modern	320 Richmond St E	$0.60	$280,000	505	$0.60 x 505 = $303	Common element maintenance, heat, water
Six50 King	95 Bathurst & 650 King St W	$0.49	$363,941	654	$0.49 x 654 = $320.46	Air conditioning, common element maintenance, heat, building insurance, water

Utilities are the services required to run your home including: power, water, sewer and heating costs. The cost of utilities, especially heating costs, can vary widely from home to home and from season to season, depending on the construction of your home and the type of heating system that is installed.

It’s important to get an accurate estimate of your utilities costs from your realtor and factor in these expenses when calculating your additional monthly costs. Utility bills are usually due monthly. If your home is a condo, part of these expenses may be covered by condo fees.

When you buy a home, you’ll need to transfer the utility accounts into your name, and make payments each month.

Home insurance can protect you against all types of damage to your home, such as flooding, vandalism and theft. Most lenders require you to have home insurance to get a mortgage so they can protect the asset they are lending on. You can pay your home insurance either monthly or annually.2

Home insurance is paid through payments called premiums. The premium you pay is calculated based on the type of coverage you want and several risk factors including:

• Where you live – more dangerous neighborhoods may be more expensive.
• How close you are to water – an increased chance of flooding could increase your premiums.
• Your replacement cost – the more valuable the house and its contents, the more expensive it will be to replace should something happen to it.
• Your home’s construction – your insurance company will take into account factors like what type of heating system you have, the age of your roof, and the type of plumbing to gauge the probability of you making an insurance claim.

There are three ways to buy home insurance:

• From a broker – who deals with a number of companies and tries to find you the best deal.
• From an agent – who sells insurance for just one company.
• Directly from the insurance company – either through their website or over the phone.

Here are some examples of the companies that sell home insurance:

Type	Examples
Broker	All-Risks Insurance Brokers Ltd, Safeway Insurance and Finances Services
Agent	State Farm, The Co-operators
Insurance Company	Allstate Canada, RBC, TD

Do you use the internet, cable and have a phone line? Those expenses will need to paid in your new home as well. These expenses will need to be paid monthly and often have an additional, one-time hook up fee. Depending on which upgrades you select, your communications bundle can range in price, but plan on spending at least $150 for this monthly cost.

Your home will also need maintenance. You’ll be responsible for repairing everything from the plumbing to the roof, as well as for general upkeep like lawn care and snow removal.

Typically, these costs will range from between 3.00-5.00% of your home’s value per year5. Generally if your home is newer you can expect to spend closer to 3.00% per year, and if your home is older you will spend closer to 5.00% per year on maintenance. If you’re home’s value is $400,000, you can expect to spend between $12,000 and $20,000 per year maintaining it, or between $1000 and $1,666/month. Some months you may pay less, but other months may require a major repair and you will need to pay more.

For example, one year you may only need to replace an appliance like your refrigerator for $1,500, in another year you may need to do a major repair, like replacing a roof, which can cost up to $8,500 for an average sized home.

If you live in a condo, some of these maintenance expenses will be covered by your condo fees, such as snow removal and maintenance of the exterior of the building and common areas.

It’s important to take these additional monthly costs into account because if you don’t, you may find your monthly budget too stretched to meet your other financial obligations, including saving enough for retirement and making your monthly debt payments. Some call this being “house poor”.

When considering how much of your budget will be allocated to your housing costs, it’s important to get a complete and accurate picture of how much you’re really going to be spending. Using our mortgage payment calculator can help you accurately estimate these costs.