When it comes to making what will likely be the largest purchase of your life, it can be challenging to know whether you are making the right choice. Between the property that has the layout you desire most, the one that is closest to your work, and the one that has some shiny new upgrades, you truly need to think carefully about what gives you the best overall package of what you are looking for. Emotions can overwhelm you as you picture your life in each one, and it can be easy to miss details.
Before you step into any open house, however, you should look at the total cost of the house. More than just the list price, it's the total cost of what could be a multi-decade-long commitment. The first thing you can check is the cost of the mortgage itself, by going to a number of banks to see how much you'll be pre-approved for and what your mortgage term and rate will be. In general, the shorter the term (1- or 2-year terms), the lower your rate, but the sooner you'll have to renew it. With interest rates rising, you likely would only be able to renew for a higher rate. Your interest rate will be unique, and is not something you can just estimate by searching online. It takes into account your credit score, assets and income and each bank may give you a different rate. If you're going to shop around for anything, do it with mortgages. A "small" 0.10% difference over the life of the mortgage could be thousands of dollars extra in interest payments.
The next thing to check is what the property taxes are. There are properties out there selling for what appears to be a fair price, until you see what the city last assessed the property at. The fact that the owners are asking much less than the city assessment is not necessarily an indication of something being wrong, but perhaps due to the city being formulaic in the way they assign property values in a particular neighborhood. For example, older infill houses (think 1980s - 1990s) in even older neighborhoods (1950s - 1960s) can be comparable in quality to renovated original houses. However, since they are "new builds" compared to the rest of the neighborhoods, the property taxes might reflect that. It is not impossible to find houses selling for $100K or more less than the city assessed value in these cases. You can find the last assessed value by searching for your city's property tax assessment map online (where you can then enter addresses in to see their assessments) or simply ask your realtor to get you the number.
It's one thing to have a roof over your head, but you're going to need to turn on the furnace and taps for it to be a house, which will have you paying for heating, electricity and water. You can ask the owner or owner's real estate agent what they have typically seen for heating costs in summer and winter as well as what the typical water bill has been. Of course, everyone's usage will be different, but it'll give you some sense of what to expect for that particular property. If you are looking at a condo, the monthly condo fee should be an exact number you can expect to pay if you move in, and would typically include some or all utilities. For any utilities that aren't included, be sure to get an idea of what that might be, as it would fluctuate less for a condo.
Homeowner's insurance is a necessity to ensure a fire or flood does not leave you out on the streets, and you can also get a good estimate by address. Call your insurance provider (if you have car or life insurance with them) to get a quote on a typical house in a particular neighborhood. It will take into account the house age, environmental features and most importantly, the claim history of the area. Typically, it helps to bundle all your insurance needs with a single insurer to get a package discount, but it may be worth getting quotes from a couple of other places.
Finally, doing a home inspection will give you an idea of things that are highest priority to fix upon moving in (or negotiating into the sale). Ask your inspector many questions, and for their best guidance on costs on replacing the high priority items. As much as you may think renovating a kitchen is a high priority, your roof will be more important to maintain.
So, now you have all these numbers and the total cost of home ownership can be figured out. Lucky for you, I have created a mortgage calculator that has places to put all of the above costs so you know your monthly expenditure! In addition, there is a chart showing how much of your mortgage payments are going towards interest and how much are going towards principal, showing how that changes over the life of the mortgage.
To give you additional information, there is an "Equity Estimate" section that gives you an idea of how much equity you will have built up over certain time periods, assuming a certain percent increase in home prices per year. The default is 3.0%, but you can change it as you see fit. 3.0% is a good, conservative number (think just beating inflation), especially with interest rates having nowhere to go but up. The total CMHC insurance number will be $0 if you have at least a 20% down payment, but it will show how much CMHC insurance you'd be paying if you don't. Note that if you do require CMHC insurance, the calculator has automatically added that to your mortgage amount. Finally, there is a number showing the total amount of interest you'd be paying over the life of the mortgage. In most cases, that'll be 25 - 30 years of interest. Keep in mind, it is based on the mortgage rate you enter, and it likely will be much more than that since mortgage rates change annually and each time you renew your mortgage, your rate will be different.
Finding a place to own can be a fun experience, just be sure to understand all of the costs involved with it so you can keep the roof over your head!