Buyer’s Guide – The Budget | Part 2: Home Ownership Costs
The Budget Part 1: Building Your Budget was an introduction into finding out what your budget is so you can buy the home that you can afford. In it, I outline the steps you take, along with tools and resources you can use to help you find out what your budget is.
So now, it’s time to look closer at the final step to finding out what your home budget is: knowing what your ongoing home ownership costs will be.
Based on the amount of money you’ve been able to allocate to housing from the budget you just built, you should have a good idea of what you will be able to afford on an ongoing basis.
Here are the costs that you will need to be able to cover:
Home Ownership Costs
The actual cost of property taxes varies according to the value of the home and the municipality in which you live. It’s often shown on the listing information for properties for sale. Take note of the property taxes for the homes in listings you look at to get a general idea of what this cost may be.
Condo fees will only apply to you if you are buying a condominium style property. Typically, these fees include maintenance of areas shared by all owners of the complex (exterior of the unit or building), contributions to a long-term maintenance fund, paying for a property manager to help take care of the property, and insurance (to name a few).
Sometimes it also covers things like heat, water, sewer, garbage disposal, or possibly even electricity.
Home Owners Association Fees
A Home Owners Association or “HOA” is more neighborhood- or area-based than condo fees. These are established most often by developers of communities to provide long-term maintenance for a neighborhood.
Not all areas have an HOA. If one does, the amount of the fees will depend on the neighbourhood’s amenities. More amenities mean higher fees. For example, a neighborhood that has a spray park will require higher fees than one that just has roadways, fences, and some landscaping to maintain.
If you own a home in Edmonton, your utilities will be the cost of gas, electricity, water, sewer, and garbage disposal. You can often get a good sense of what these costs look like by asking friends or family (or Edmonton’s Reddit community) with a similar size or age of home to what you are considering about what their utility bills are.
You’ll also want to consider internet, cable, and, if you’re old school like me, a home phone. Those costs are often easy to find online with the local providers.
For Water and Sewer services in Edmonton, your provider is Epcor. Find out more about water sign-up here.
All properties need insurance. No exceptions. The kind of insurance, however, will vary by type of property. If you’re buying an apartment, condo, or townhome, the condo board will have insurance that covers damage to the exterior of the unit so your need for coverage would be lower compared to coverage for a single-family home. In a single-family home, you need coverage for the entire property.
There are many, many options for home insurance in Edmonton. Ask friends and family for their recommendations, and do some research to find the best provider for you.
Renovations, Improvements, and Home Maintenance
While not a consistent requirement of all homes, keeping your home in the best condition will require some work.
If you buy a “project house,” you will want to make sure you have factored those expenses (labour and materials) into your budget. If you’re buying something that doesn’t need that, you still need things like furnace filters, plants for your garden, shovels and lawnmowers, etc.
Get to Know Your Budget
At this point, your home buying budget will likely be in a bit of a “draft form,” but hopefully you have a good sense of what would be comfortable for money to put towards your home.
A Mortgage Broker becomes a fantastic partner to help with your budget. They will build more certainty into those numbers. If you keep this budget in mind, you can avoid ending up house poor by buying a home you can’t actually afford to live comfortably in.
So, those are the ongoing costs of home ownership, but there is a major one-time cost to plan for: The Down Payment!