Are you asking yourself: ”How much do I need to buy a house?’‘ Well, do we ever have an answer for you! The amount of money you need to buy a house in Greater Moncton depends on several factors, and we will break down the costs right here for you.
Let’s discover the costs of buying a home in Greater Moncton, from down payments to closing fees and no fees left behind.
Important Notes
As mentioned previously, the amount you will need depends on several factors, such as:
- The location
- The purchase price
- The property’s condition
- The type of property
- The title to land
- The down payment you can make
- The prevailing interest rates for mortgages.
If you are curious to know approximately how much your mortgage payment will be, you can use this Mortgage Calculator, or ask your favourite REALTOR®
The Non-Negotiables
1. Down Payment of 5%
A down payment is an initial lump sum of money that a homebuyer pays upfront when purchasing a home. It represents a portion of the total purchase price, while the rest is typically financed through a mortgage loan.
Generally, you can expect to pay a minimum down payment of 5% of the home’s purchase price, which lenders typically require to qualify for a conventional mortgage.
So, if you are buying a $300,000 home, you will most likely need a down payment of $15,000, so 5% of the purchase price.
What Are The Exceptions Where 20% is Required?
There are some exceptions to the rules where your initial down payment will need to be at least 20%.
- The home you are buying is more than $500,000: You will automatically have to pay 20% of any value higher than $500,000.
Ex: Purchase price is $650,000, therefore, you will pay 5% of $500,000 and 20% on $150,000. - You are buying a rental/ commercial property: You will need a down deposit of 20% unless you plan to move into the property.
- Second property: If this is not your primary property, thus the home you will be living primarily in, you will need to put a bigger down deposit towards your mortgage.
- Other conditions: Your lender might request 20% down depending on your financing or employment situation. This is why it is important to get pre-approved before starting to look at buying a house in Greater Moncton.
2. Deposit For Home Purchase
A deposit is a sum of money the buyer provides to show the seller that they are serious about purchasing the home. It’s usually paid when the buyer makes an offer, after or before other conditions have been met, and it functions like a security deposit.
The deposit compensates the seller if the buyer backs out of the deal for reasons not allowed by the contract once the deal is firm and lawyers have started working on the files. This will usually cover the cost of putting the property back on the market and paying the extra expenses until it sells again, lawyers fees and any other fees the sellers will have to pay due to a buyer baking up the sale.
That deposit is returned to the buyer on closing day or if both parties decide not to proceed with the sale anymore.
In competitive markets, buyers may offer a higher earnest money deposit to make their offer more appealing, but the amount usually depends on the price of the property and can vary from $1000 to $30,000 (or more if the seller requires a bigger deposit, which rarely happens in residential real estate).
For the conditions, you need to have at least $800 to pay for your inspection, water test or any other testing you wish to make before purchasing.
3. Closing Costs
Closing costs are the fees and expenses a homebuyer must pay at the final stage of a real estate transaction, often referred to as the closing. These costs are separate from the down payment and include a variety of fees associated with obtaining a mortgage and transferring ownership of the property.
These costs will differ per property but usually include the 1% land transfer tax, property taxes, water & sewer fees, fuel adjustments, title insurance and the lawyer’s fees.
For a detailed list of closing costs, download our PDF: Closing costs
The Additional Costs
Optional Conditions
Conditions of purchasing a home are always optional, but highly recommended, as they protect you from losing money and buying a home that won’t fit your expectations in the long run.
Many conditions can be applied to a purchase and sale agreement. The most popular ones that are not mandatory but should always be done, in our opinion, are the Inspection & Furnace inspection.
In summary, these costs make up the full financial picture of a home purchase. Understanding them is crucial for proper budgeting and avoiding surprises during the buying process. Planning for these expenses ensures you can confidently navigate the financial aspects of homeownership.
