Purchasing a home is one of the biggest milestones of adulthood and the biggest financial decision most people will ever make.

In a hot market like Toronto where average prices are upwards of $700,000, it can take first time home buyers up to five years to save the minimum five percent down payment. And that’s only the beginning. Owning a home is huge financial undertaking that often entails unforeseen expenses that can leave homeowners grappling to keep up.


Here are five expenses of home ownership you should budget for before signing on the dotted line:

1. Closing Costs

These costs cover all the auxiliary expenses that come with the sale of a property such as utility adjustments, certificate of location and any legal or notarial fees. In some instances the seller may assume these costs but more often than not it's the buyer’s responsibility.

A rule of thumb is to budget for one-half percent of the purchase price, but err on the side of caution and budget two percent. In the case of a $450,000.00 house, approximate closing costs could run upwards of $7,000.00—a significant amount in addition to the down payment.

Be sure to include closing costs when you’re crunching numbers.

2. Home Inspection

A home inspection ensures the buyer will be well aware of any defects, structural or otherwise, that may have gone undetected during a property visit. Although inspections are usually carried out as one of the final steps of the home buying process and before the transaction is complete, it's an important step that shouldn't be missed.

Home inspection costs can run as much as $500.00. While it might not seem like a significant amount, it can come as a surprise if you didn’t budget for it.

3. Repairs and Maintenance

Many home buyers are surprised at how much it really costs to maintain a home. A broken faucet here. A leaky roof there. Landscaping and snow removal. Expenses that seem to pop up out of nowhere can quickly add up.

Be sure to have a small fund to cushion any emergency repairs that might be necessary. Best to have a few thousand dollars tucked into a TFSA for these sorts of unexpected repairs.

4. Property Taxes

Property taxes are assessed based on the value of your property and can fluctuate from year to year. The current residential tax rate for the City of Toronto is approximately 0.69 percent, which would equate to $3,105.00 in property taxes for a house valued at $450,000.00.

It's important to budget for and pay property taxes within the stipulated deadlines as late payments will incur penalties.

5. Upgrades

Even if you’ve bought a property in pristine condition, there might come a point when a few upgrades might be necessary to increase the value of your home.

The upgrades most home buyers look for when purchasing a property are kitchens and bathrooms. Those upgrades don't come cheap. Even a basic kitchen upgrade can cost as much as $15,000.00.

If you’re in the market for a property, be sure to consider the potential costs of any upgrades that might be necessary to increase the value of your property for future sale.

Personal Finance