10 Costs to Budget for Before Buying a Condo: Part 2
Continuing from yesterday’s 10 Costs to Budget for Before Buying a Condo (Part 1)..
Now that you’ve got your upfront costs covered for your condo, what’s next? See below for the most common ongoing costs to budget for when buying a condo:
1. Mortgage payments
While this one is obvious, there are many options when it comes to your mortgage payments. It’s always easiest to go with the bank you’re already with, but there is no shortage of other options such as another bank, credit unions, and mortgage brokers – all of whom are eager to win your business.
Start by doing your research online and finding out today’s best rates. Then compare the mortgage conditions such as amortization periods and pre-payment options that come with each mortgage. Ask yourself what your priorities are when it comes to paying your mortgage – whether that means paying it off as quickly as possible, or keeping your payments low and spreading them out over a longer term. Determine which is best for you based on your particular set of circumstances.
Once you’ve looked around, give your own bank a chance by showing them the offers you’ve got. If they can match your other offers, it may be worth it to stick with them for the convenience and for building a relationship with them for the long term.
Condo insurance is a must-have to protect you from a potentially large financial hit should anything happen to your condo – or worse yet, if damage such as a fire or leak in your condo causes problems for another unit.
Many condo buyers think that their building insurance (covered by the condo fee) is all that you need. Although building insurance covers all the common areas in the building, you are responsible for the personal contents within your unit, as well as damages or liabilities directly related to your unit. If you make any upgrades, such as removing carpet and installing hardwood floor, you want to be sure your insurance covers the upgrades as well should they ever need to be replaced.
Insurance is usually offered as a packaged deal. For an average one-bedroom condo in downtown Toronto, expect to pay a few hundred dollars a year. Like mortgages, it’s best to shop around for the best price and policy to suit your needs.
3. Condo Fees
Condo fees cover the cost of the use of amenities in the building, as well as maintenance of the grounds, the parking lot, elevators, lighting, and other common areas used by all residents. In some buildings, your condo fee may also cover utilities. Condo fees are priced by the square foot, and so larger units will be more expensive than smaller units. In all cases, however, it’s important to budget for increases in the condo fees that happen from time to time. Before buying your condo, your lawyer will be able to tell you if any increases have been planned, by reviewing the condo’s status certificate.
Condo fees are paid monthly to the condo corporation, most often cheques, post-dated cheques, or pre-authorized payment.
Utilities are one area you can save money on if you pay attention to your usage. Turning off lights before you leave a room and hanging your clothes to dry instead of using the dryer are great ways to save on electricity. For your internet and cable needs, always negotiate with the providers as you’ll probably find freebies for new customers like specialty channels at no extra cost for the first year or discounts for bundling services.
With automatic payments set up to cover your costs on the mortgage and condo fees, you’re finally ready to move in! One of the major costs (but also most exciting!) as a first time buyer is purchasing new furniture. You might already have a couch or a desk from your rental apartment, but you will probably find yourself wanting to add a side table next to it or getting a new set of dishes to replace chipped ones for the kitchen.
The costs add up, but you can save money by taking your time to furnish your condo. There’s no rush to get everything at once. Look for upcoming sales, and don’t forget about big department stores like the Bay, which often have large sales at least once or twice a year. Discount stores like Home Sense also offer a high quality selection of home decor and furnishings at lower prices.