In addition to the purchase price, buying a property involves various costs that should be taken into account. These are grouped under what are known as “ancillary costs.” They consist of real estate agent fees, notary fees, and costs related to the mortgage.
The notary’s fees and real estate agent’s commissions account for a significant portion of these costs. Note that several fees are the seller’s responsibility, and that buying a new home allows you to benefit from reduced ancillary costs. Find out what the costs are when buying an existing home or a new home.
Notary fees
Also known as acquisition costs, fees, and disbursements, notary fees are the responsibility of the buyer. Amounting to between 8 and 10 percent of the property’s sale price, they include the land registry tax (TPF), the notary’s fees, and administrative costs.
The fees are proportional to the property’s value. The TPF, on the other hand, consists of:
- assessment and collection fees;
- departmental registration fees;
- and the municipal tax.
The notary may grant a discount on fees. This discount depends on the property’s sale price, and the discount rate decreases as the taxable amount increases. Estimate your notary fees using an online calculator.
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Mortgage-Related Costs
As a buyer, you must pay additional fees related to the mortgage. These consist primarily of interest, the rates of which vary depending on your down payment. However, there are other expenses as well, such as bank processing fees, mortgage insurance, and guarantee fees.
It’s worth noting that you can reduce the cost of your mortgage insurance by switching insurers. You can take out a policy other than the one offered by the bank or lender, provided the policy offers at least the same level of coverage. In addition, interest rates decrease as you approach the end of your mortgage repayment term.
Condominium Fees
If you purchase a unit in a condominium, you must pay certain fees related to condominium maintenance charges. They are broken down as follows:
- overhead costs (maintenance, administration, and upkeep of common areas);
- special expenses, consisting mainly of operating costs for common facilities, as well as a contribution toward expenses related to any exterior renovation work;
- any miscellaneous maintenance expenses, as determined by the decisions made at the general meetings.
Renovation Work
If renovations are needed when purchasing an older property, you will be responsible for the costs of those renovations. These renovations are primarily intended to improve the energy efficiency of the house or apartment you are purchasing.
The cost of renovation work varies depending on the property’s size, its overall condition, the types of work involved, and so on. For this reason, it’s important to calculate these costs in advance. However, please note that you may be eligible for government assistance if you carry out work that improves the energy efficiency of the property you have purchased.
Brokerage Fees
If you go through a local real estate agency—which simplifies the process and saves you time—you should expect to pay the corresponding fees. These fees typically range from 1 to 7 percent of the sale price. Once again, you can use an online tool to estimate your agency fees, or use the one provided by your local real estate agency directly.
Other additional costs to expect when buying a home: local taxes
The purchase of real estate is also subject to local taxes, the amounts of which vary from one locality to another. The cost of property tax can be split between the seller and the buyer. However, you must also budget for the payment of the household waste collection fee.
How can you reduce incidental costs and notary fees when buying a home?
When you buy a new home, you can reduce your closing costs, particularly by:
- a partial or total reduction in property tax;
- with reduced notary fees;
- with minimal maintenance costs;
- the absence of fees related to real estate inspections.
However, you should also factor in a few additional expenses, such as moving costs. If this is your first home purchase, be sure to check out our guide for first-time homebuyers to help ensure your project is a success.
If you need advice or personalized assistance, please feel free to contact your local branch.
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