Real estate prices in Ottawa have slumped in recent months, and some prospective homebuyers are viewing the lower prices as an opportunity. After years of skyrocketing real estate prices, slower sales are opening up an opportunity for buyers. Prices for both freehold homes and condos have become significantly more affordable, but there are still plenty of other costs to buying a house.
From your mortgage to the hidden fees, these are the top five things you need to look out for to save money when you buy a new home or condo.
#1 Bidding Wars – Expectations Are More Realistic Today
Over the past few years, it was common to hear stories about homebuyers getting outbid by tens (or hundreds) of thousands of dollars. It was a frustrating situation for average homebuyers who didn’t have endless wealth to tap into for a home.
When you’re on the search for houses for sale in Ottawa, talk to your realtor about today’s market and set realistic expectations. You may be able to get the right property much closer to asking than you would have been able to in the past.
#2 Your Interest Rate Is Everything
Falling housing prices have not been the whole story. Rapidly rising interest rates mean that, by and large, the carrying cost of a new home hasn’t gone down at all, but more of it is in interest.
As more and more of those monthly payments get eaten up by interest, the best way to save money on a house is to qualify for a lower mortgage rate. These are a few ways you can get the lowest rate possible on your mortgage:
- Improve your credit score in the years leading up to your purchase.
- Save a bigger down payment.
- Compare at least three to five lenders.
#3 Mortgage Default Insurance Can Add Costs
When you have a down payment of less than 20% of the purchase price, the CMHC requires you to get mortgage default insurance. This protects the bank if you stop making payments on your mortgage.
Mortgage default insurance adds a premium of 1-8% of your mortgage, which is added to your mortgage payment.
#4 Don’t Forget the Land Transfer Tax
The Land Transfer Tax is another cost you face when you buy a house. The LTT is a provincial tax, and it is always the homebuyer who pays for it. The cost of the LTT is tiered so that you pay a lower rate on the first $55,000 and so on up to the highest rate on amounts above $400,000.
#5 Fees – The Endless List
When you buy a home, there’s a seemingly endless list of extra fees you’re going to face. You’re going to have to pay for things such as:
- A land surveyor
- An appraisal fee
- A home inspection fee
- Legal fees
Many of these services will also charge GST/HST on their services, including the notary or real estate lawyer who reviews the purchase agreement and your mortgage.
While home prices look much lower today, there are still plenty of costs to prepare for.
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