How Insurance Works When Buying a New Home

You just got off the phone with your TD Mortgage Advisor and they had great news, you were pre-approved and now you’re ready to dive into a new house hunt with confidence. Whether you’re a first-time homebuyer or just moving into a new house – you probably have some questions. And luckily for you, we have answers. Before you charge ahead, here are a few things to keep in mind to ensure you strike the perfect balance between fitting your needs and your budget as you set out to buy a new home.

1. What is your overall affordability?

As a first-time homebuyer or even if you’ve been through the process of buying a new home before, determining affordability is very important. There are a lot of factors that affect whether you might consider a property to be affordable, but one thing is certain: that decision goes far beyond just your mortgage payment. Remember to think about not only what you can reasonably afford today, but how prepared you would be to cover any unexpected costs in the future.

For example, a high-quality new build may offer the benefit of having fewer costly surprises whereas even a well-built older home may present more unknowns like unexpected major repairs or necessary upgrades.

2. Is location an important factor?

It most definitely is. Whether you’re moving to an older well-served community or a newer up-and-coming neighbourhood, consider the following factors to make sure you’ll have access to everything you may need:

  • Availability of nearby amenities (shops, restaurants, gyms, banks)
  • Ease and length of travel to work, friends and family
  • Location of public green spaces such as parks and bike paths
  • Location of nearby schools

3. What will your utilities cost in a new house?

When estimating your utility costs consider the following:

  • The size of the space you’ll be cooling and heating
  • The age of the home, doors and windows
  • The condition of the roof and insulation
  • The efficiency of appliances (e.g. washer/dryer, refrigerator etc.)

4. What about home insurance?

Getting the right home insurance coverage is one of the more important decisions you’ll make prior to purchasing your new home. It is not required by law in Canada; however, most mortgage lenders will require it. You can get a quote online in just minutes to help you find the best coverage to fit your needs.

When thinking about your insurance needs consider the following factors that could affect the cost of your coverage:

  • Type of residence (e.g. single family, multi-family etc.)
  • Construction material
  • Type and age of heating, plumbing, and electrical systems
  • Fire protection (e.g. proximity to emergency services)
  • Type of coverage and deductible
  • Your claims history and discount eligibility

Some ways you can save on your home insurance premium are:

  • Bundle your home and auto policies with TD Insurance
  • Get preferred rates if you are part of a recognized alumni, employer group or member of a professional association
  • Install a centrally monitored fire or burglary alarm and/or centrally monitored water alarm
  • Choose a higher deductible

5. Have you made a pre-purchase checklist?

Here is a list of some important things to consider before you sign on the dotted line to buy your new house:

  • Weigh the advantages and disadvantages of new vs older builds, keeping in mind that build quality should be a strong factor to consider.
  • What are the risks if you don’t include a home inspection as a condition in your purchase offer?
  • Is your budget flexible enough to cover costs that could increase? (e.g. mortgage, property taxes)
  • If purchasing a new home, how reputable is the builder? Have they had any claims or lawsuits?

Keep these tips in mind as you shop for the home of your dreams and you’ll be ready to take this next exciting step with confidence. Happy hunting!

Insurance Bureau of Canada. Home Buying Tips. Retrieved June 2021, from