{"id":41857,"date":"2020-03-10T07:28:15","date_gmt":"2020-03-10T11:28:15","guid":{"rendered":"https:\/\/canadianbudgetbinder.com\/?p=41857"},"modified":"2025-01-06T09:42:30","modified_gmt":"2025-01-06T09:42:30","slug":"8-house-expenses-you-should-expect-as-a-homeowner","status":"publish","type":"post","link":"https:\/\/digitalskyweb.co\/canadianbudgetbinder.com\/2020\/03\/10\/8-house-expenses-you-should-expect-as-a-homeowner\/","title":{"rendered":"8 House Expenses You Should Expect As A Homeowner"},"content":{"rendered":"\n

<\/span>Estimated reading time: <\/span>12<\/span> minutes<\/span><\/p>\n\n\n\n

If you are considering purchasing a home for the first time, there are house expenses you must be aware of.<\/p>\n\n\n\n

Owning A House Is More Than A Mortgage Payment<\/h2>\n\n\n\n

If unprepared, costly home repairs can take a comfortable monthly budget and turn it upside down.<\/p>\n\n\n\n

This type of financial uproar can cause increased debt and a downward spiral if you can’t pay it off.<\/p>\n\n\n\n

Before you sign the mortgage documents at the bank or lending agency, the most important thing you can do is create a budget.<\/a><\/strong><\/p>\n\n\n\n

I’ve blogged about putting together a mock household budget<\/strong><\/a> that you should live with for 3-6 months to understand what expenses you should expect as a homeowner.<\/p>\n\n\n\n

These are everything from fixed expenses which are bills you will pay that will always be there, and variable costs.<\/p>\n\n\n\n

Variable expenses are those that you have control over, such as groceries.<\/p>\n\n\n\n

If you have $200 for groceries monthly and need an extra $50, look at your variable expenses.<\/p>\n\n\n\n

You can work on these expenses to bring household budget expenses down.<\/p>\n\n\n\n

I received an email from a young man interested in purchasing his first home.<\/p>\n\n\n\n

Let’s have a read and see how we can help him get a better idea of what house expenses to expect.<\/p>\n\n\n\n

Owning A House Expenses<\/h2>\n\n\n\n

Dear Mr.CBB,<\/p>\n\n\n\n

I’m in my early 20s and looking to buy a home in the next year or two.<\/p>\n\n\n\n

I’ve saved up a sizeable downpayment and have been to the banks inquiring about a mortgage recently.<\/p>\n\n\n\n

It seems they think I can afford more than I can based on my downpayment, credit rating, and net income.<\/p>\n\n\n\n

What typical house expenses should I expect<\/strong> when owning a home?<\/p>\n\n\n\n

I don’t want to get in over my head and then live pay to pay or face losing my house.<\/p>\n\n\n\n

Thanks,<\/p>\n\n\n\n

Derrick<\/p>\n\n\n\n

Hey Derrick,<\/p>\n\n\n\n

Thanks for your email. I’ll try to explain what we paid for house expenses when we first bought our home in Ontario, Canada.<\/p>\n\n\n\n

Mr.CBB<\/p>\n\n\n\n

Common Household Bills<\/h2>\n\n\n\n

How much does a house cost per month?<\/strong><\/p>\n\n\n\n

Well, likely more than you think, incredibly if you haven’t researched house ownership.<\/p>\n\n\n\n

Honestly, house expenses differ based on where you live in Canada. However, we’ll explore the most common.<\/p>\n\n\n\n

House expenses are those that every homeowner should come to expect when owning a home.<\/p>\n\n\n\n

After you’ve bought your home, you MUST budget for specific bills with your house.<\/p>\n\n\n\n

What’s frightening is that many Canadians get fixated on that weekly, bi-weekly, or monthly mortgage expense and forget about the rest of the household bills.<\/p>\n\n\n\n

Have you ever had someone tell you that you could afford a mortgage based on what they will lend you?<\/p>\n\n\n\n

Probably, we’ve all been through it, but the sad reality is that you can’t trust anyone but yourself.<\/p>\n\n\n\n

People go into debt mainly because of unexpected house expenses they did not factor in.<\/p>\n\n\n\n

On the other hand, if house expenses were considered, they may have been far lower than they were.<\/p>\n\n\n\n

Sometimes you may get potential buyers asking the current homeowner for utility bills or costs to run the house.<\/p>\n\n\n\n

You will also know what the cost of property taxes you must pay to the city.<\/p>\n\n\n\n

So, you can find more information than you thought about a house you want to purchase.<\/p>\n\n\n\n

Remember that personal usage and the number of people in the home will increase or decrease variable expenses but not fixed.<\/p>\n\n\n\n

House Expenses List<\/h2>\n\n\n\n

No one says you must have cable, internet, a home phone, or even a cell phone to manage your house expenses.<\/p>\n\n\n\n

You have some control over these expenses because you can add and take away what you want to pay for.<\/p>\n\n\n\n

For example, although you may think this is a monthly fixed expense, you can often cancel subscriptions or data plans if it’s too much for your budget.<\/p>\n\n\n\n

It’s similar to grocery shopping, considered a variable expense since costs can fluctuate based on your spending decisions.<\/p>\n\n\n\n

With a fixed expense like property taxes, mortgage, or rent payment, it’s a bit more complicated than that.<\/p>\n\n\n\n

The only perk with a fixed expense is that you always know the cost of your monthly payment. <\/em><\/p>\n\n\n\n

Property Taxes<\/h2>\n\n\n\n

Your property taxes are a levy based on your home assessment and the neighbourhood you live in.<\/p>\n\n\n\n

How are property taxes calculated?<\/strong><\/p>\n\n\n\n

Property taxes are calculated<\/strong><\/a> using the Current Value Assessment of a property, as determined by the Municipal Property Assessment Corporation (MPAC), applying it by the combined municipal and education tax rates for the applicable property class.<\/p>\n\n\n\n

We pay our property taxes monthly, automatically debited from our bank account.<\/p>\n\n\n\n

Many mortgage companies will factor your property taxes into your mortgage payment and pay for it on your behalf.<\/p>\n\n\n\n

This ensures you don’t miss a property tax payment and one less house expense.<\/p>\n\n\n\n

When we had a mortgage, we paid our property taxes on our own without the help of our lender.<\/p>\n\n\n\n

Home Maintenance<\/h2>\n\n\n\n

We like to keep a minimum of $5000 a year in savings<\/strong> towards house maintenance simply because that’s what everything costs about now.<\/p>\n\n\n\n

This is above and beyond our emergency savings account.<\/p>\n\n\n\n

All joking aside, it depends on how big or little your home is and what renovations you plan to do.<\/p>\n\n\n\n

Our neighbor, for example, saves $5000 a year to do one renovation project for his home.<\/p>\n\n\n\n

On the other hand, home maintenance expenses also cover other things like the lawnmower, hired help, roof repairs, or any repairs, for that matter.<\/p>\n\n\n\n

Perhaps you need new windows, or you have a leak that your insurance company won’t cover.<\/p>\n\n\n\n

It’s not something you should consider. Every homeowner must have a home maintenance budget.<\/p>\n\n\n\n

Utility Bills<\/h2>\n\n\n\n

Unlike other bills such as cell phones, cable, and so forth, your utility bills are a must when you purchase a home.<\/p>\n\n\n\n

You’ll pay for bills like hydro, water, gas, and other rental units like water heaters or ac units.<\/p>\n\n\n\n

Our hydro and water bill comes monthly, whereas our water heater rental comes every three months.<\/p>\n\n\n\n

Your utility bills will fluctuate based on costs and how much you use.<\/p>\n\n\n\n

You can ask the previous owner of the home you buy for the average costs of the bills or the utility company when you call to set up your accounts.<\/p>\n\n\n\n

Remember that many utility companies ask for a deposit before they hook up your services, especially if you’re a first-time home buyer.<\/p>\n\n\n\n

This is to ensure they have a backup in case you don’t pay your bill on time, but it will be used when you decide to close your account.<\/p>\n\n\n\n

Some utility companies who trust your bill payments will be made on time offer the deposit back to you or put it towards a current bill.<\/p>\n\n\n\n

Mortgage Payments<\/h2>\n\n\n\n

For most Canadians holding a mortgage will likely be the most expensive debt they will ever own.<\/p>\n\n\n\n

When we bought our house, we did so on one income only, just in case something might happen.<\/p>\n\n\n\n

Thankfully, we took that route as something did happen as Mrs. CBB lost her job months into homeownership.<\/p>\n\n\n\n

Related: What happens if I have a late mortgage payment?<\/a><\/strong><\/p>\n\n\n\n

For this reason, it’s critical to analyze how much your mortgage will cost you and the best time to pay for it.<\/p>\n\n\n\n

We chose accelerated weekly,<\/strong> so we paid more than it would have cost weekly.<\/p>\n\n\n\n

The reason was to pay the principal down faster, which worked.<\/p>\n\n\n\n

In 5 years,<\/strong><\/a> we paid our entire mortgage off by saving money and being frugal, although this is not the norm.<\/p>\n\n\n\n

Paying off your mortgage fast<\/strong> is based on many factors, such as net income, debt, and monthly expenses.<\/p>\n\n\n\n

Below are the charts I created using a Canadian mortgage calculato<\/strong><\/a>r, as mortgage affordability is only a piece of house expenses.<\/p>\n\n\n\n

Based on a $300,000 mortgage<\/strong> with an interest rate of 5.00% amortized over 25 years,<\/strong> this is what your house would cost you once it’s paid in full.<\/p>\n\n\n

\n
\"Mortgage<\/figure>\n<\/div>\n\n\n

Beginning of Mortgage Payment Schedule<\/h2>\n\n\n
\n
\"mortgage<\/figure>\n<\/div>\n\n\n

End of Mortgage Payment Schedule<\/h2>\n\n\n
\n
\"end<\/figure>\n<\/div>\n\n\n

Mortgage Summary<\/h2>\n\n\n\n

 Over the 25-year amortization period, you will:<\/p>\n\n\n\n