Buying Apartment

[jackmeister]

I need some help with buying an apartment, as I will be a first-time home buyer.

I'm interested in a slightly larger apartment in the 500-600k range, in Richmond. I understand that the mortgage rates are quite low right now, so I am jumping on this opportunity to move out.

By the end of the year I should be able to have around 20% saved for a down payment. However, my gross salary is around 80k after bonus, would that be enough to cover the mortgage payments or will I need my parents to co-sign? Would the mortgage/house exceed my current income. Would moving out to an apartment at that price range reasonable? I will be 23 when I move out.

Say when I do get all the financing done, what things should I look for in particular when buying an apartment?

I have absolutely no idea how these mortgage things work and google has not been quite helpful.

Need some advice! Thanks

[asian_XL]

lucky to be 23 and make 80k a year.

if you can't afford an apartment at that price range, I don't know who else can afford it.
talk to your bank about the co-sign thingie

[Volvoman]

you should be fine

if you make that much money and put down that much money, with today's interest rate, it should be near the $1600-$1800 a month range for mortgage...depending on how long your period is...and if you do bi weekly or monthly payments. However, don't forget about building maintenance fee, property tax and utility tax.

Also, don't forget about buying shit for a new apartment.

[sh0n]

Congrats to you for your first time home purchase.

To be 23 and making 80K a year and save up 100K+ thats definitely a feat.

I think you will be fine given the down payment you saved and the income you make. Make sure to double check with your financial ad visor.

[Gumby]

What other monthly payments do you have? Financing a car? Do you eat out all the time, party a lot, etc.?

But yes, making 80K a year at 23, with so much money saved up, sounds like you've got a good head on your shoulders.

[Wetordry]

do the math

500k less 20% down = 400k mortgage

Example: BMO right now says 4.55% fixed for 5 yrs

use their website for payment calculator = $2,225.02 per month

dont forget to add maintenance fees (1000 sqft condo = about $300)

= $2,525 per month

[Wormiez]

You also need to consider the history of your credit. They will request to review at least 2-3 years of your previous credit history, T4s... You will need at least 2-3 years history of making 80K+ to be eligible for a 500K+ condo.

Not to mention your monthly fees for the condo, strata fees and utilities cannot equate to more then 45% of your monthly income after tax.

[jackmeister]

Originally Posted by Wormiez

You also need to consider the history of your credit. They will request to review at least 2-3 years of your previous credit history, T4s... You will need at least 2-3 years history of making 80K+ to be eligible for a 500K+ condo.

Not to mention your monthly fees for the condo, strata fees and utilities cannot equate to more then 45% of your monthly income after tax.

I think I have decent credit.. no outstanding debts or financing things. I've never paid anything bills late so I think there shouldn't be much on my credit besides having 4 credit cards with ~30k total credit available.

I'm pretty sure all those fees and such would be more than 45% of total. So would having my dad, mom, and/or brother help me co-sign be helpful in any way?

The thing with my income is... I just graduated from university last may and I've been working in the family business since, so I've had income for a long time, but only until recently it became 80k.

I personally bank at TD, so all my savings and everything else is there. However, because my father and all the company stuff is done through BMO, I believe I could get a decent rate from them as well.

Would it help if instead I declare it as an investment property (to collect rent as opposed to living in it myself) to the mortgage specialist?

[jackmeister]

Originally Posted by Gumby

What other monthly payments do you have? Financing a car? Do you eat out all the time, party a lot, etc.?

But yes, making 80K a year at 23, with so much money saved up, sounds like you've got a good head on your shoulders.

Just food and some liquor. No time for other stuff lol.

Other than that, no big financing items

[PNF]

even based on the above calculationg at ~$2500/month, you're probably spending too much on home.

Do you really need a $500-600K house?

$80K is your gross? how much of that is after tax? (what is tax rate in vancouver?)

General rule of thumb is, if you spend more than 35% of your monthly gross income on house, you're over spending.

If you make 80K, and that makes your monthly gross $6666, and $2500 is at 37.5%. While that is not out of line, but a bit high IMO.

Also, what about of property tax? school tax? (dont think this was included in the $2500 calculated? Or is it included?) Also, there are misc items that you will definitely encounter when you're owning a place.

You are ahead of 95% of other people buying a house at 23 and making $80K +, I would say

1) Buy a smaller place at $400-500K, unless you are getting a great deal on a place at a GREAT location.. then stretch and get that..

2) buy a smaller property as an "Investment" property, because this way, you would be continuing to SAVE more money toward future purchase (a bigger house, investment, etc.), and while your investment property sits and grow value (hopefully). But keep in mind, at least in the US, if you buy a property and declare it as an Investment property, you will be paying additional premium on whatever rates your getting.

So, my advise is.. DONT say it is for investment and you're renting it out, since this IS your first property and you can still live at home, so people will just assume this will be your primary residence. (ok, I'm not supposed to tell you to do this).

[Wetordry]

Do what most asian parents did back in the day / even now....


buy a vancouver special / cookie cutter house (ones w/ 3 separate suites), w/ the parents' leverage

- you live upstairs & rent out the bottom 2 suites as mortgage helpers (usually 1x 1 bedroom & 1x 2x bedroom)

[unit]

Originally Posted by PNF

even based on the above calculationg at ~$2500/month, you're probably spending too much on home.

Do you really need a $500-600K house?

$80K is your gross? how much of that is after tax? (what is tax rate in vancouver?)

General rule of thumb is, if you spend more than 35% of your monthly gross income on house, you're over spending.

If you make 80K, and that makes your monthly gross $6666, and $2500 is at 37.5%. While that is not out of line, but a bit high IMO.

Also, what about of property tax? school tax? (dont think this was included in the $2500 calculated? Or is it included?) Also, there are misc items that you will definitely encounter when you're owning a place.

You are ahead of 95% of other people buying a house at 23 and making $80K +, I would say

1) Buy a smaller place at $400-500K, unless you are getting a great deal on a place at a GREAT location.. then stretch and get that..

2) buy a smaller property as an "Investment" property, because this way, you would be continuing to SAVE more money toward future purchase (a bigger house, investment, etc.), and while your investment property sits and grow value (hopefully). But keep in mind, at least in the US, if you buy a property and declare it as an Investment property, you will be paying additional premium on whatever rates your getting.

So, my advise is.. DONT say it is for investment and you're renting it out, since this IS your first property and you can still live at home, so people will just assume this will be your primary residence. (ok, I'm not supposed to tell you to do this).

i completely agree. 80k is quite good, but 5-600k is a lot! i think 4-500k would be more comfortable, and since you're going for a condo in richmond anyway, you could still get something quite nice at that price point.

[Chuck Norris]

Not that anyone asked but here is a take on all of this.

If you're paying $500-600 on a condo in Richmond I'm assuming it's going to be a decent size (well, decent for our overinflated market).

For that price in Richmond you should be getting near 1500-2000 sq/ft. If not, you're overpaying.

Next, if it's just a place for you, why do you need 1500-2000 sq/ft?

It's more to clean, you're paying more in taxes and strata for space you don't use. Plus you end up buying furniture that you think you'll keep but you just end up junking it. Condo furniture and house furniture are different. I had a pretty big place in downtown before (1800 sq.ft) and I used the bedroom, the bathroom, the kitchen and once in a while, the living room. I pretty much wasted 1000sq/ft of the space but I was still paying for it. Sure, it was impressive if people came over but who cares? I'm not buying it for someone else to enjoy at my expense.

The smart thing to do would either pay a bit more for a home and rent the place out. At least that way you're getting some ROI rather than shelling out the money for nothing or consider buying a smaller condo. 750 sq/ft for a condo is plenty for one person. Less to clean, less to pay and overall better. It's also easier to rent out later on if you plan on buying a home later and keep the condo. Smaller condos are always much easier to rent out because there is a larger market. I tried renting out my place and it was impossible. Who has $3500 to spend on a rent a month compared to $1400? Larger base demographic if you decide to rent it out later. Keep in mind, if you're making 80k a year and you borrow less, you'd be able to pay down the mortgage much faster (maybe 5-8 years) if you're aggressive.

I used to live in a 10,000 sq.ft home growing up so I initially felt a 1800 sq.ft condo was punishment but I was shocked at how little space I used and how quickly I adjusted. Besides, the whole point of having your own place when you're young is to bang chicks in. Save your money, enjoy yourself and pay off your mortgage faster as it would be less.

Keep in mind that real estate prices are likely to pull back a bit so buying at your limit right now is not wise. Also, if you've never lived on your own you will be surprised at where your money goes. I was making really good money at home and when I moved out, it didn't feel so good anymore

[Wetordry]

^ those are words of wisdom

Originally Posted by Chuck Norris

Besides, the whole point of having your own place when you're young is to bang chicks in.

This point is very true, but a little contradicting......

you need to impress the chicks, so a 1bdrm condo wont do... min 2bdrm IS A MUST!

[jackmeister]

Originally Posted by Wetordry

^ those are words of wisdom



This point is very true, but a little contradicting......

you need to impress the chicks, so a 1bdrm condo wont do... min 2bdrm IS A MUST!

yea baby its a 2 room suite.. with a very big balcony. lol

[jackmeister]

Originally Posted by Chuck Norris

Not that anyone asked but here is a take on all of this.

If you're paying $500-600 on a condo in Richmond I'm assuming it's going to be a decent size (well, decent for our overinflated market).

For that price in Richmond you should be getting near 1500-2000 sq/ft. If not, you're overpaying.

Next, if it's just a place for you, why do you need 1500-2000 sq/ft?

It's more to clean, you're paying more in taxes and strata for space you don't use. Plus you end up buying furniture that you think you'll keep but you just end up junking it. Condo furniture and house furniture are different. I had a pretty big place in downtown before (1800 sq.ft) and I used the bedroom, the bathroom, the kitchen and once in a while, the living room. I pretty much wasted 1000sq/ft of the space but I was still paying for it. Sure, it was impressive if people came over but who cares? I'm not buying it for someone else to enjoy at my expense.

The smart thing to do would either pay a bit more for a home and rent the place out. At least that way you're getting some ROI rather than shelling out the money for nothing or consider buying a smaller condo. 750 sq/ft for a condo is plenty for one person. Less to clean, less to pay and overall better. It's also easier to rent out later on if you plan on buying a home later and keep the condo. Smaller condos are always much easier to rent out because there is a larger market. I tried renting out my place and it was impossible. Who has $3500 to spend on a rent a month compared to $1400? Larger base demographic if you decide to rent it out later. Keep in mind, if you're making 80k a year and you borrow less, you'd be able to pay down the mortgage much faster (maybe 5-8 years) if you're aggressive.

I used to live in a 10,000 sq.ft home growing up so I initially felt a 1800 sq.ft condo was punishment but I was shocked at how little space I used and how quickly I adjusted. Besides, the whole point of having your own place when you're young is to bang chicks in. Save your money, enjoy yourself and pay off your mortgage faster as it would be less.

Keep in mind that real estate prices are likely to pull back a bit so buying at your limit right now is not wise. Also, if you've never lived on your own you will be surprised at where your money goes. I was making really good money at home and when I moved out, it didn't feel so good anymore

Thanks for the advice I'll definitely take a look into it! The place im looking at is 2 bedroom, 2 storey penthouse @ 1250 feet, in a very new building. Maybe it's just too overpriced. HAHA

I was planning to put in enough downpayment so that i only pay around 2k a month towards the mortgage. most likely i'll pay bi-weekly or semi-monthly. The downpayment will come out of my savings and loans from my dad and mom, interest free.

Well I'm moving out because I can't stand certain things at home, but thats a completely different topic altogether.

[taylor192]

500k less 20% down = 400k mortgage
Example: BMO right now says 4.55% fixed for 5 yrs
use their website for payment calculator = $2,225.02 per month
dont forget to add maintenance fees (1000 sqft condo = about $300)
= $2,525 per month

Then add property tax of 0.6% x $500K = $3000/yr or $250/mn
= $2,775/mn

Using taxtips.ca, if he makes $80K in BC his take home is ~$60K or ~$5/mn. $2775 is a LOT when he only has $5K/mn cause he also has to pay insurance, utilities, ... and probably has a car.

Nevermind that $100K as a downpayment is a good start, yet he'll have to set aside $10K for furniture (probably $20-30K since he's buying a penthouse) and a few $$$ for lawyer fees and closing costs, then he's below the 20% CHMC downpayment threshold and owes CHMC fees now too. Oh, and what about land transfer tax?

Sounds like someone has high expectations that need reconsideration.

[JesseBlue]

i say get a house instead...or better yet first time home buyers don't need to hit a home run right away...mortgages are transferrable

[sh0n]

Definitely lots of words of wisdom on this thread regarding the apartment purchase.

You see life is pretty funny because there are certain times in your life you want certain things (i.e you are in certain stages)

Typically the natural progression for the home buyer is:

Live at home > Rent > Buy apartment/condo > Buy townhome > Buy House

Depending on your life style, I can see why you want to buy a 1000 sq ft + apartment. But do keep in mind you have all these extra fees involved (maint, utilities, prop tax)

Like Chuck said does it make sense really to buy a super large apartment just to realize you don't need the extra space yet you are still paying for it? You are very fortunate in that you are debt free, have good savings and making decent money. Personally I would think about getting a house because you will have literally bypassed all those stages I posted above. Yeah you'll have headaches with maintaining it and doing this and that. But I certainly see more value buying a house as first off you don't have the monthly sunk costs of maintenance fees - those add up at 500 a month thats 6K a year (you can buy so many things or go on a nice vacation). You can even try to get value out of your property by taking the cookie cutter approach. Did I also mention you get ownership of an actual sizable piece of land? (last I heard they don't make land no more except for this one place called Dubai). Of course with being a home owner there are also lots of headaches you gotta deal with to - maintaining the place yourself, dealing with theft/neighbors

Anyways that's just my opinion and you could take it for what its worth.

[Ulic Qel-Droma]

listen to chuck

[underscore]

another idea is to not jump straight to a mortgage right away. rent a place for a year or whatever and see what your monthly costs are living on your own and get a solid feel for how much you're really comfortable spending on a place. It may seem like a bit of a waste paying rent for a year but think of it as research.

[Chuck Norris]

Just to add to all of this. I just purchased a place in the ghetto for $98,000 and I will probably spend about $15,000 on the inside to reno it doing a lot of the work myself and having friends who are contractors doing the tricky bits.

700 sq/ft ground floor and I couldn't be happier.

Is the place awesome? Well, it's an old building that looks like shit and it's in the better area of Surrey which is like saying you got fucked up the ass by someone with a small dick rather than a big one.

The point is, it's up to you what you're comfortable with. My mortgage works out to about $390 a month including utilities, maintenance and taxes.

Considering my income, I'm way out in left field. Hell, I might even be out of the stadium completely but life is so stressful and living modestly is really fun. I'm not suggesting you do the same but there is no rush to buy a bunch of stuff. Just relax. If you lose your job and you have a $2000 a month mortgage, guess what? Employment Insurance is not going to help you and the stress is out of control.

[orange7]

build an appartment in China and rent it out.

[johny]

Originally Posted by taylor192

Then add property tax of 0.6% x $500K = $3000/yr or $250/mn
= $2,775/mn

Using taxtips.ca, if he makes $80K in BC his take home is ~$60K or ~$5/mn. $2775 is a LOT when he only has $5K/mn cause he also has to pay insurance, utilities, ... and probably has a car.

Nevermind that $100K as a downpayment is a good start, yet he'll have to set aside $10K for furniture (probably $20-30K since he's buying a penthouse) and a few $$$ for lawyer fees and closing costs, then he's below the 20% CHMC downpayment threshold and owes CHMC fees now too. Oh, and what about land transfer tax?

Sounds like someone has high expectations that need reconsideration.

\
the 100k isn't even his, he said he was borrowing it from his parents... so on top of the mortage he'll be paying that back as well.

[underscore]

^ nowhere did he say he borrowed it, he said it's his savings. that said, probably not the best idea to spend everything you've got on the down payment, you'll need to furnish the place, plus probably a good idea to have a few months mortgage and whatnot in reserve