Buying a new house for the first time comes with some obvious expenses. If you’ve already considered the deposit and down payment, then planning for closing costs should be your next focus. These often-unexpected costs might not be immediately obvious, and they can add up to thousands or even tens of thousands of dollars.

Closing costs average between 1.5% and 4% of the purchase price of your new home. For example, if you buy a $500,000 home, it would cost you upwards of $20,000 to close the deal – which makes quite a difference in your spending power.

These closing costs can often come as a surprise to first-time homebuyers. Here are the most common to prepare for so you won’t be taken aback by the extra expenses and have to reconsider your budget when you’re ready to sign on the dotted line.

Home Inspection

You’re about to buy your dream home; having a professional inspect the property is a smart move when investing such a large sum of money.

A home inspection is an evaluation of the structure, systems and other important features of the property. After the inspection, you can discuss any concerns that may have come up with the seller – such as any deficiencies you want fixed before moving in or negotiating the final price if you will be responsible for the repairs.

Ensuring that the property is safe before making a lifetime investment is money well-spent. Depending on the property and the company you choose to work with, the cost of a home inspection is usually around $500.

Real Estate Lawyer

A real estate lawyer plays a key role in helping you close the deal by taking care of all the legal aspects that go on behind the scenes. In other words, he or she is the unsung hero of the home-buying process, ultimately giving you the keys to your new home.

Lawyers examine the purchase agreement and the status certificate if you’re purchasing a condo. They also ensure the home title is free from defects and liens. Additionally, the real estate lawyer will purchase the title insurance, register the home in your name, calculate the land transfer taxes, and prepare the statement of adjustments and paperwork.

With so much responsibility, it’s important to choose the right real estate lawyer. Select a professional ahead of time who specializes in real estate. Depending upon their hourly rate and the type of transaction, you can expect to spend about $1,500 in legal fees.

Land Transfer Tax

Another expense you’ll have to pay is the land transfer tax. This is the government’s share of the pie for transferring the ownership title from the seller to the buyer.

The transfer tax is not a fixed amount; it’s dependent upon where you are buying and the purchase price of the property. For example, if you’re buying a place in Toronto, you’ll have to pay a second land transfer tax – a municipal land transfer tax on top of the provincial fee.

The land transfer tax can easily amount to tens of thousands of dollars. However, you can usually get a rebate on a portion or all of the tax. Your real estate lawyer will calculate it and tell you how much you owe on the statement of adjustments.

Other Closing Costs

There are many details to consider when buying a new home and moving in. Other final costs could include:

• Appraisal Fee: The mortgage lender will probably ask you to pay for an appraisal, which could cost around $300.
• Changing the Locks: It’s common to change the locks for security purposes.
• Renovations and Repairs: Consider anything that you want or need repaired or changed right from the start – and plan your budget accordingly.
• Moving: Decide if you want to move yourself or if you plan to hire movers.
• Storage: Consider whether you need extra storage space for the items that don’t fit in your new home or that you only use on a seasonal basis.
• Furniture: Do you need to buy new furniture?

Understanding the closing costs involved when buying a new property will help you plan your budget and make sure you have money set aside for other fees in addition to your down payment. Plan ahead and enjoy the new home – without the hassle of unexpected costs.

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians, available now on Amazon and at Chapters, Indigo and major bookstores, and as an Audiobook on Amazon, Audible and iTunes.