Sunday, January 10, 2016

We all buy based on monthly payments

But do you actually stop to think and consider the value of what you are purchasing?

Some recent events are causing me to re examine some decisions I have made in the past;  Namely, we decided that paying $735 per month in maintenance fees was acceptable since we lived near the lake, had transit and concierge both at the front door.

Since, I work primarily from home I relished the conveniences of no maintenance obligations, a garbage chute, the power washing of my above ground parking spot inside a heated garage, snow removal and landscaping.  I walked to my office coffee in hand.

We have a new child.  Everything has changed in the span of 9 months

This is causing our revisit to a detached home;  deemed un attainable by pricing, as detached property in the west Toronto averages well into a one million dollar purchase.

The alternative is to accept modern, thermally efficient, well wired (no aluminium or weekend electricians) centrally located townhouse that are in close proximity to a subway station.

A number of these communities have emerged, Islington Village, Furrow Lane, Van Dusen, Bering Avenue, Six Points Road,  and newest is Westhaven's Tiffany Park, [just south of Judson beside the No Frills]

BUT  what are you buying for almost $900,000?  Lets say that together ...  NINE HUNDRED THOUSAND DOLLARS!

The lot size in the pictured sample is 14.76 feet by 61. 81 feet. This includes the patio or rear deck over your tandem garage.  There will be a rear door to the alley.  A lot of this size is called a POLT   Parcel of Tied Land,  the balance of the property is actually a condominium corporation for the ongoing road landscaping and upkeep.  This way we are buying a FREEHOLD property.

Trims and finishes are modern granite and hardwoods, Fireplaces are Gas fired, but there is little rear yard for gardening.

Let' examine the Monthly carry costs

$900,000 Purchase Price
  180,000 Downpayment (20% will save you the CMHC premiun)
 $720,000 First Mortgage  at Today's rate  you qualify at 4.64% but get 2.69% for 5 Yr.

LTT (Toronto Land Transfer Tax to purchase)     $28,200

That payment is $3,294 per month assuming no rate increases over the next five year period.  Your mortgage balance at renewal is $611,709.  We have not paid the maintenance fees or property taxes, Nor turned on any lights or the heat.  Have you

A good used car carries at $500 per month with 0.9% financing but I only extended myself to $35,000.

Adding my car debt requires an income level of $250,000 gross per year ( family or combined ) and that simply is beyond most first and second time buyers.  Mortgage Finance rules have changed for 2016 requiring Larger down payments and stricter lending guidelines. Those Millennials fortunate enough to have found a decent paying dependable job will some trouble qualifying for new mortgages; Those with contract work will find it a struggle.

What are your thoughts on Toronto Housing affordability?

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