Your home may be the biggest financial commitment you make in your life. When saving up to purchase a house, most people think of the ongoing cost of their mortgage bill. However, there are more costs than just a down payment to be aware of when you purchase your home and you don’t want to be caught off guard about other home expenses. Working with a Realtor and talking with a financial advisor at the Provincial Credit Union can help you figure out what costs you can expect with the purchase of your house.  

Here is a breakdown of common one-time costs that come with buying a home on Prince Edward Island:  
 

• Legal Fee – A real estate lawyer reviews and finalizes the purchase agreement, ensures the property title is clear, and handles the legal transfer of ownership to the buyer. The lawyer's fee can vary but is typically between $1,000 and $3,000. 
• Home Inspection Fee – A professional inspection can help identify potential issues before you finalize the purchase.
• Sewer Inspection Fee - This isn’t mandatory, but some buyers choose to have a sewer inspection to avoid any costly surprises.
• Mortgage Default Insurance Fee - This is required when your down payment is less than 20% of the purchase price. This is usually added to the mortgage amount and paid over time as part of regular payments.
• HST  - If you are building a home or buying a newly built home, you will need to pay 15% HST. Certain new homes are eligible for the Government of Canada's New Housing Rebate. If you're buying a home from a previous owner, good news! You won't have to pay HST.
• Appraisal Fee - The appraisal fee is the cost to have a licensed professional estimate the current market value of a property before a mortgage is approved. This is a required closing cost unless you have mortgage default insurance.
• Title Insurance Fee – This is a one-time insurance policy you purchase when buying a home that protects you and your financial institution from financial loss due to problems with the property’s title.
• Real property transfer tax - In PEI, this is 1% of the greater of the purchase price or the assessed value.  First time homebuyers can be exempt from this.  Find a list of exemptions here. 
• Interest adjustment costs – This is another one-time cost that can occur when you buy a home and take out a mortgage. It covers the interest that accrues on your mortgage between the closing date and the first regular mortgage payment. 

Additional home expenses to keep in mind may include renovation costs, appliances, lawn care and snow removal items, moving expenses, condo fees (if applicable), and services hook up fees for services such as internet, electricity, and cable. 

Once you’ve received the keys, your monthly and annual expenses will continue. Knowing what to expect will help you budget for your real cost of homeownership. Common annual expenses on PEI include: 

• Property Tax – This includes municipal property tax, fire district charges, and waste removal. To find out more information about PEI property taxes, visit Property Taxes and Charges | Government of Prince Edward Island
  
• Heating - PEI winters can be cold, so heating costs may fluctuate depending on the year. Heating systems can include heat pumps, oil furnaces, propane, or even firewood. Understanding your home’s heating system helps you anticipate costs.
• Utilities – These costs include electricity, water and sewage, waste disposal, internet, and gas. 
• Mortgage Loan Insurance Premium – This is required if your down payment is less than 20% and is calculated as a percentage of your loan amount.
• Property Insurance – This rate is affected by several factors based on your geographical location, the age and type of property you are purchasing, and the extent of coverage. You will need to talk to an insurance provider to get a quote for your home.  

Buying a home is exciting, but being financially prepared is key. Understanding both one-time and ongoing expenses can help you create a realistic budget for homeownership. Tools like our mortgage calculator can help you estimate monthly costs, including your mortgage payment, property taxes, and utilities, so you can make an informed decision about what you can comfortably afford. 

If you have more questions about homebuying, book an appointment with one of our Financial Service Officers by texting 1-855-728-2211 or calling your nearest branch.