Keys to a New Home

Post-Purchase Costs: What You Need To Know

In Home Buyers by TheRedPin Team1 Comment

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As first time home buyers, it is important to understand that a home search and the decision to purchase a home are not the only things to consider. A property is a long-term investment that has implications on the bottom line on various different levels.

Post-purchase costs, which eventually evolve into recurring costs, are the most daunting of expenses. Many home buyers do not realize the impact these costs have and what they can do to reduce them. In this piece, we take a look at the various post-purchase costs, their financial implications and what first time home buyers can do to reduce their impact.

Closing Costs: The “Hidden” Cost

Closing costs are the most underestimated costs when it comes to home buying. Many interested buyers, especially first time home buyers, do not budget enough to cover these post-purchase costs. Closing costs are up-front costs that you must pay after the purchase of your home, typically before you move in. Various costs that classify as closing costs include appraisal fees, legal fees, title insurance, septic tank tests, water tests, etc.

Legal Costs to owning a HomeHome buyers are generally asked to keep aside between 1% and 3% of the purchase price of the home. Legal fees, for example, are a major variable. Depending on the quote you get, you can be set back thousands of dollars. CIBC recommends that you keep aside between $1,300 to $2,500 for legal fees. It is important that you shop around and not just take the first option you get. Asking your lender to recommend someone is a good start and doing your own research helps as well.

Legal fees are not the only issue. Property tax adjustments can set you back thousands of dollars too. Previous home owners may have prepaid property taxes to the government for the year. If you are to take possession of the home within the year, they will request to reimburse the property taxes for the months you are the owner. Depending on the property value and tax level, this could be very expensive. It is safe to say that between $1,000 and $2,000 should be kept aside for property tax adjustment purposes.

Lastly, a major closing cost is home inspection; a process that very few first time home buyers are conducting when purchasing a new home (Discussed Below). Often, primarily with resale homes, first time home buyers can ask for the closing costs to be included in the deal, which will save home owners thousands of dollars when wrapping up a deal. You should always communicate this with your agent.

Home Inspection: An Absolute Must

A home inspection is precisely what it means: an inspection of the home to search, identify and evaluate any major problems that could create major issues for home owners.

Home InspectionA home inspection covers, but is not limited to, the following things:

  1. Evaluating the condition and integrity of the roof
  2. Checking the basement for various issues, including water damage, asbesto, etc
  3. Asbestos within the building structure – not a requirement but certainly something that should be requested if not pointed out
  4. Heating system (plus the water-heater) and the air-conditioning system
  5. Walls, doors and insulation
  6. Plumbing and electrical
  7. Drainage system
  8. Overall structure & foundation

Home inspections can run anywhere between $300 to $1000, depending on the size of the home, level of inspection and other inspection-related factors. Costs can vary especially if special services – like asbestos inspection – are conducted, which are usually worth the additional cost. It is important you get a certified home inspector to evaluate your property to the fullest. Certification ensures that the dollar you spend will provide credible, reliable information.

Home purchase finalization can be kept pending based on the results of a home inspection, so ensure that you communicate that with your agent and, as such, with the selling party. You must always do a home inspection before you lock yourself into a house. Last thing you want is to purchase a home and find out its a money pit.

Moving & Storage Costs: Multiple Little Things

Once you’ve bought a property, the next step is moving in from your old property or rental. Moving costs however aren’t simply “pack and move”. There are many costs involved that first time home buyers need to take into account.

Moving TruckHere’s a quick overview of these costs:

  1. Packing supplies – To move all your belongings effectively, it’s important to package them properly, not just to protect your stuff but keep things organized. Boxes, package tape, bubble wrap, shrink-wrap and all cost quite a lot of money, creating $100-$200+ of expenses from the get go. Home owners should shop around for supplies. Cardboard boxes can be taken from local grocery or liquor stores. Also, always consider buying from wholesale, bulk outlets, that offer large quantities for a fraction of the cost. Tape and such can be bought in bulk.
  2. Moving Vehicle – To move stuff, you gotta have something to move with. Hiring a truck can push you back between $30-50 dollars a day if you’re doing the driving.  Don’t forget, you may also have to pay insurance on that if not covered by your credit agencies and all the fuel you use to get from point A to B. With that said, you can always just hire a moving company. This however will set you back a couple of hundred, sometimes even $500+, to pay for their man power and what not. Food for thought!
  3. Cleaning & Restoration Costs – You can’t just leave your old place like a garbage dump and you definitely don’t want to end up at a garbage dump. Cleaning costs may sound like a small cost, but it depends on what you end up doing. Simple spring cleaning will take away a couple of dollars where as painting and such may take away a couple of hundred. Some rental properties require that tenants repair any damages, which can vary on the level of damage.
  4. Moving Utilities and AmenitiesCable TV, telephone, heating, electricity bill, etc. These are all various things you have disconnect or re-assign from your old address to your new one. Some of these services don’t have moving charges, but depending on where you’re moving and the extent of the change, there may be disconnection and re-connection costs involved. Worse come to worse, you may have to cancel services and if you have a contract, that could involve cancellation fees.
  5. Storage Costs – Sometimes you have to move out of your old place before you can move into your new one. This would require you to store many of your belongings in a storage facility or somewhere similar. Storage facilities can cost a lot of money, depending on what services you need (heated storage building, etc). Try to work around storage costs by keeping belongings at a friends place or in a rented truck. This way, you save on over-the-top storage expenses that could throw off your budget.

Moving and storage costs are major costs that need to properly be accounted for. Whether you’re paying a few dollars and doing the work yourself or hundreds of dollars and using professional services, its vital that these costs are carefully accounted for and monitored so they don’t affect your budget and your overall new home bottom line.

Other Expenses

Apart from the above expenses, some of the other expenses include immediate renovation costs. Certain parts of your new home may need to be fixed to make the space livable. These could include replacing the floors, replacing kitchen counter tops  adding new appliances, painting the walls, etc. It is important that you determine what needs to be done well before the move to provide enough time to ensure the tasks are done, enough time to calculate the cost of each fix and create a feasible timeline between purchase of the home, renovation and move in.

Not applicable to folks moving in from a rental, home buyers selling their previous homes should take into account the various real estate costs involved. This includes listing and selling the home, doing the various paper work, paying the agent, covering costs such as closing costs of the buyer, etc. This could be a few hundred dollars to a large chunk of change. If anything, these costs should be a priority over other expenses to ensure that the implications of your old home are not taken with you.


Home buying is not a simple process and from our discussion above, even post-purchase costs include a million different elements to think about. Post-purchase costs can range from a few hundred dollars to a few thousand dollars, a large range to create a proper budget around. Always consult your mortgage broker, your real estate lawyer and your agent to ensure that you are aware of the various costs involved with the purchase of your new home. With the same token, do your research on what it would take you to move into your new home and budget for that accordingly. With appropriate financial planning, the post-move experience will be a memorable occasion rather than a financial burden.


  1. ctheiss

    What about land-transfer tax? At 2-4% in the GTA, it can cost more than all the other expenses combined!

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