My First Home: breaking down the numbers

I’m sure you guys are all wondering how much I paid for my townhouse, and also what my mortgage payments and budget will look like going forward. I’ve been careful in not mentioning any specific numbers until I knew the deal was final. But as of Friday, all conditions have been removed and the townhouse is officially mine with a possession date of May 4th. :)

Here is a spreadsheet that best illustrates my expenses each month:

The budget
This is a rough working budget based on my net monthly income, and I feel like I’ve accounted for everything. The income I based this budget on is guaranteed based on my FT job, PT job, solid ongoing contracts and does not fluctuate lower than this amount. This does not include any freelance or blogging income, which can sometimes be quite a lot per month. But because freelance/blogging income is somewhat irregular and not guaranteed, I chose not to include it in my monthly budget. Should I lose all my ongoing contracts and PT job, my FT job will still cover all expenses and allow me to save around $700-800/month. Which is absolutely ideal. Also, the budget I created is pretty comfortable, and can be trimmed by quite a lot if necessary. This budget breakdown also means that I’m putting away almost 50% of my income – more if I make any freelance/blog money during the month.

Cost of the townhouse:
The list price for the home was $265,900. We started by offering $251,000 and after 2 days of negotiations and 4 counter offers, I ended up paying $259,000.

For people who don’t live in Vancouver, this might seem like a lot to pay. But I think it’s a pretty fair price for a 1-bed townhouse in a good neighbourhood. To put this price in perspective, rent in the neighbourhood that I purchased in will run anywhere from $900-1,000 for a 1-bedroom apartment that isn’t a disgusting dump (I used to rent a place a few years ago close to this neighbourhood, and it was $725/month but it was seriously rodent infested and gross). The townhouse beside mine sold for $258,000 in October. Mine is a end-unit (more desirable – one less neighbour & more windows), and has 2 parking stalls instead of just 1. So I feel comfortable that I didn’t pay more than I should have.

The townhouse is located about a 30 min. drive from downtown Vancouver, and right in the middle of the Lower Mainland – in my #1 preferred neighbourhood. I am walking distance to everything that I need, and I’m across the street from my gym now! :) Plus, I now only have a 10-15 min. commute to work, which is pretty much amazing.

The down payment & financials
I had 20% for the down payment (just over $50,000). This still left approximately $10,000 in various other savings accounts, including my Emergency Fund.

But then I decided to make a huge financial decision. Because I am buying this place on my own, I decided to use part of my down payment to pay off my car loan (payments are currently $270 bi-weekly). I didn’t have to, and some might call me crazy for doing it, but I feel like it’s the best thing I could possibly do for myself. And although it doesn’t make the most sense financially (since I had a 0% interest loan on my car), it will make my life a whole lot easier in the long run to just have those payments eliminated. And I’m glad I had the cash to do it.

So, $17,500 went to pay off my car loan.

I used $25,900 as my down payment (10%) on the $259,000 mortgage. But because I didn’t have the 20% down payment, I had to pay an insurance premium of $5,128 for a total mortgage amount of $238,288. My mortgage is accelerated bi-weekly at an interest rate of 3.74% (5 year fixed). I plan on rounding up my payments each month, contributing a lump sum payment every year on the anniversary date, and putting any ‘found’ money towards the mortgage. Hopefully by being diligent with extra payments, I will be able to significantly soften the blow of having to pay that insurance premium.

The remaining $7,000+ is set aside to pay for my closing costs, moving expenses, very minor renovations (will need to hire someone), and a few items of furniture that I do not currently own and need – like a bed. Any money left over will go straight onto the mortgage or into the House Fund.

And there you have it! Every possible detail about my budget and home purchase you could ever want. :)

Thoughts, questions, comments?

About Krystal Yee

I'm a writer, personal finance blogger, and marketing professional based in Vancouver. I'm a former Toronto Star (Moneyville) columnist, author of The Beginner's Guide to Saving and Investing, and co-founder of the Canadian Personal Finance Conference. When I'm not working, you can usually find me running, playing field hockey, or plotting my next adventure.

50 comments

  1. This is amazing, lady!!! Ne'er have I seen such a beautifully balanced spreadsheet :) I also creeped your networth and YOWZA, what a different owning a home makes!!! Good for you!!!!

    Looking forward to more discussions with you … in the meanwhile, I have a TON of work to do on my own travel fund.
    My recent post New Beginnings

  2. congrats! i took the homeowner leap when i was 23 and i don't regret it for a second. my only question is… doesn't your mortgage include your property tax fees? mine does. i pay a little more per month and they put it away for tax time. i'm sure that's an option that you could turn down but i found it easy to just lump away that little bit extra every biweekly payment. that said, you're much more disciplined than i am at putting away monthly for annual expenses, so i'm sure you'll do better than i would! congrats again!

  3. Thanks! :) We have much to discuss over the coming months. I am so excited!

  4. If I get to see you May, all my dreams will have come true. :) No pressure or anything. Just kidding, I understand. World travel is a bit more important. But only a bit.

  5. Congratulations Krystal!
    I completely understand your thinking by paying off the car. I would have made the same. You made yourself a very nice and realistic budget, that will allow you to pay off the morgage in even the worst situation. Also by your plans of matching payments regularly and paying the allowed lump sums yearly, you will be done with the mortgage in less than 10 years. Well done!

  6. fabulouslyfrugirl

    Congrats, Krytsal, and thank you for sharing such a detailed break down with us!

    I don't think I'm quite ready to settle into a house, just yet, but when I do, I'll be looking back at this post for things to consider. I live in Toronto, so like FB said, I'm not even sure if that can get me a little shack – I prefer non-condo – either a townhouse or semi-detached house.
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    • Thanks! :) Yeah I definitely prefer non-condo living too. At first, I thought I could do it. But having to share an entrance and hallways with people just makes me want to cringe. I consider myself extremely lucky to have found a townhouse that I can actually afford. Having my own entrance makes it feel more like a proper house – without the expensive of one! :)

  7. congrats on your new purchase! You've broken down your expenses in great detail though I think you may have undershot your utilities a bit…. ($80 per month seems really cheap!) but your savings of just under 50% of your net is incredible at your age!!!

    Just keep in mind of those extra little expenses of a new home which you may encounter as soon as you take possession… ie… hosting house-warming parties; new drapery; gad I didn't realize this was leaking!; and what the heck smells? …
    My recent post My Pricebook- Edmonton Grocery Prices Comparison- April 17- 2011- Food has gone up again!

    • Yeah, I will have to monitor my utilities over the next few months. I'm not really sure what to expect, but I have wiggle room within my budget, so I'm sure I'll be able to make it work.

      I also have some cash set aside for minor repairs, and home furnishings. Hopefully it's enough. And if not, then I'll just have to wait and save up for whatever it is I want to buy.

    • I agree, I think it's a bit low for utilities. When my husband and I purchased our condo 2 years ago, the realtor told us hydro in particular was $65/month. That figure was off by at least $40, because we pay anywhere between $105-$150/mth for hydro for a 750 sq ft. condo.

      There will definitely be small things you didn't account for that will come up once you move in.

      Congrats Krystal on the purchase of your new home! All the best!

      • Good to know! Thanks. I previously wasn't spending more than $30/month on hydro in my old apartment (which was probably 500 sq.ft.) … this townhouse is just under 700 sq. ft. so it will be interesting to see what my bills come out to!

        • One thing we've found with our end-unit townhouse compared to our old apartment is that you lose heat off the exposed outer wall. We used to be so insulated on a 2nd-floor apartment so even though our sq footage didn't go up a huge amount when we moved, having a roof (vs. an entire other apartment above us) and 3 exposed walls (instead of just 1) meant that our utilities quadrupled.

  8. Ah. Thanks for clarifying.
    My recent post I just don’t get…

  9. wheee! Congratulations Krystal :)

    I can understand why you would want to pay off the car loan, having debt to pay off just bites, especially when there’s a mortgage to pay off. It must feel good to have your car paid off in full, now you can just focus on the home debt.

    We pay off our property taxes through the municipality. Do you have to pay separately for water consumption? I know in Burnaby you have to.

    Remember you can start deducting all of these: property taxes, utilities, insurance on mortgage etc. for your blogging income, since you are getting paid and using your home as a place of work. That will help you get some money back!

    My recent post Book Review- The Millionaire Next Door- The Surprising Secrets of America’s Wealthy

    • Thanks! :) I don't think I have to pay separately for water consumption… but then again, I'm not sure. I should look into that.

      Also yes, I will definitely be deducting all of those expenses against my side business/freelancing. Tax time next year will be very interesting! haha

  10. Thank you so much for posting all of this! I'm in my early twenties living on Vancouver Island and I'm starting to toy with the idea of buying my own place. I'm going to meet with a friend who is a mortgage broker to get an idea of what I can get and see if it matches what I can afford.. I hope I'm as successful as you are! Congratulations!
    -I see that quite a few people have asked this as well but so far I haven't tripped across an answer; whether your mortgage includes property taxes and whatnot.

    • The numbers I posted in my budget do not include property tax. You can see in the SAVINGS section of my budget that property tax is included in my House Fund. Good luck with your property search! One day I hope to move back to Vancouver Island, but for now, I'm sticking it out in Vancouver. :)

  11. Nice job and congrats on your purchase! Seems well managed. Bummer about the PMI insurance, but if it makes you happy, that's the most important thing.

    Cheers, Sam
    My recent post Are You A Financial Dumb Ass

  12. The price for your place seems very reasonable for Vancouver! I just bought a pre-sale condo (two bedroom) in December with my fiance, so reading your entries about your new places makes me very excited to be homeowner next year! LOL Congratulations!!!
    My recent post Personal Goals for 2011

    • Thanks! Congrats to YOU for buying with your fiance! Home ownership is such a rollercoaster of emotions, but I'm getting really excited. You must be bouncing off the walls!

  13. Ay caramba! 260X rent?!

    Ah well, at least you've budgeted well so you'll handle it.
    My recent post TD e-series

    • Well, to be fair, the rent I was paying before wasn't a sustainable situation – and definitely wasn't realistic in the Vancouver area. I was very fortunate to have been able to be in that sort of situation for the last few years. "Normal" rent for a 1-bedroom apartment would be closer to $900-1000/month.

  14. I think the best decision for you was to pay off your car. you made the best choice for sure. Congrats again!
    My recent post Part time job update

  15. Congrats!

    Just curious, how did you come up with the 50k down payment . I think you mentioned that you cashed out 25k from your TSP, but did you also have another savings account with 25k?

    • Not all is revealed on this blog! :) It was from a combination of savings and investments.

      • I have to say that this is disappointing to hear. I understand not wanting to reveal too much and while I respect your privacy, I also think this is a finance blog and those type of things should be discussed . You wrote a post about how you plan on saving x amount for a down payment and now you don't want to reveal the details?

        For me personally it was motivating to see the amount that you were saving and I'm sure you inspired other people, but now you're saying that you will not reveal how you came up with the money for this down payment. I don't think there is any shame in revealing that this was a gift from family or friends, but saying that you can't reveal how you saved or came up with that money in a finance blog is disappointing and makes me less likely to follow the blog.

        • I'm sorry you feel that way. It's not to say that I did not reveal how I came up with the money – I have always stated that I would have around $50,000 for a down payment, which would be roughly 20% of the purchase price. And I also stated that it came from savings and investments. I have worked for almost 5 years to save that kind of money. Just because I am a personal finance blogger, I don't think it's fair to ask me to reveal every single detail of my finances. For example, I don't talk about what funds my RRSPs are in, or my non-registered mutual funds, and I'm not sure I ever will. There needs to be boundaries set and I need to feel some sense of privacy.

          • Well it's obvious this was a gift. There would be no reason for you to not disclose a separate savings or investment account. Nothing wrong with that… just wish it was acknowledged so that other people realize you didn't just save 50k in a few years.

  16. Well done! Amazing saving rate!!! nearly 50% for your age is just amazing. You obviously resisted simply getting a more expensive place and stuck with the recommended 3.5 times salary for home value. These days it's around 5.5 times …

    My recent post How To Use Stock Chase Effectively

    • Thanks! I had it narrowed down to this 1-bed townhouse, and another 2-bed townhouse. But the 2-bed was about $30,000 more, had higher strata, and would cost more to maintain. In the end, I'm very glad I bought the smaller place. Not only is it cheaper, but it allows me to lead the lifestyle I want to lead, and save at a high rate at the same time. :)

  17. no personal expenses, are your necessities included with grocery-that's where mine is and I've lumped in household there too

    • I very rarely have personal care expenses, and when I do, yes, I would try to lump them into groceries or miscellaneous. For more expensive personal care items (like my face cream), I will adjust my budget for that month to reflect the expense.

  18. Great post. When I've done this and looked back at actual, I have always been surprised at how much "unexpected" expenses add up and eat away at savings. This is especially true with home ownership, where there are little ongoing expenses with basic maintenance, and then the "long tail" maintenance that is a few thousand every few years in the form of special assessments. It's hard to budget for that but I account for that like any accountant should: put $ into a capital cost fund, as if you were deducting expenses through the CCA provision in the tax code, and inflation-hedge it.

    Other expenses have been things like small family emergencies, friends visiting, and vacations, even if small ones. If you admit to yourself that these are plausible I would budget for them; that helps segment the long-term savings for retirement from the slush fund savings.

  19. Believe me, that price seems cheap compared to where I live (Sydney, Australia). I don't know what it's like in Canada in terms of different locations having different price points. I own a house on the Gold Coast (different state to where I live) with my brother – 5 bedrooms, close to the university and hospital etc etc, and was $420,000. I currently share the rent on a 2 bedroom apartment in Sydney close to the uni I work at, and it cost $500,000. I would love to own a home to live in, but 1 bedroom places are hard to come by in Sydney, and I refuse to pay half a million dollars for a two bedroom apartment (I don't live in a bad area, but it's not like you are getting a view of the ocean or the harbour!)

    The mortgage rate is cheap compared to here – how are the mortgages structured. Can you pay it off earlier? (I.e. when your income goes up can you make voluntary repayments).

  20. Your budget looks really close to mine… almost identical really, and regional (and gender) differences could make up the rest.

    As someone previously mentioned, your utilities seem a bit low. I know it's warmer in BC, but I average about $150/month. Your house insurance estimate might be a bit high. Your property taxes are amazing – my house is similarly priced in ON, but my property taxes are at least double.

    You may want to consider an increased payment on your mortgage. I doubled mine (you may not want to go that much… I was paying 1700/month after the double) and never actually noticed the difference… and it really helped get the thing paid off. I think I earn a very slighly higher but similar income than your fixed income… so once you add your variable income it might be a piece of cake.

    I do really disagree with your decision to pay CMHC and pay off the car. It seems akin to the "silly snowball" of paying off smaller debts rather than more cost effective debts. A good compromise might've been to pay off $5k on the car if you could manage to avoid CMHC. But different strokes, I guess.

    • Yeah I did increase my mortgage payments from what it is, to $600 accelerated bi-weekly. I can only increase to a maximum of $660 accelerated bi-weekly (which is 20% more than my minimum payments), so I might go up to that amount if I feel comfortable. But I also plan on making lump sum payments each year as well.

  21. Byrocat, thanks I was going to mention about property taxes too… Krystal, you should put more aside for your house fund to account for bigger house repairs, unless you plan to take those out of savings. Rule of thumb I learned by being an HGTV junkie is to budget 3% of the purchase price yearly for repairs. It may sound high, until you need a new roof or your basement floods. I am one year into home ownership and learned my home inspection was crap and my roof was in worse shape than expected. The best quote so far is $11K for my entire roof (better than the $20K quotes) but I am stuck without a healthy reserve so soon after purchase. Home ownership is not like renting… there are several unanticipated expenses. That being said, it's also satisfying. Congrats on your purchase and good luck!! And as for all the nay-sayers about paying off your car, I understand their point about the extra $5K. However, I also see your point about not having your monthly cash flow choked by that extra payment. Good on you for clearing outstanding debt on a depreciating asset so you can focus on paying down your home. Cheers, Marla

    • Thanks for your comment! I think that for now, I'm going to stick with what I'm saving in my house fund. If there are bigger repairs or assessments in my future, I can always pull from my savings or emergency fund. After all, it's all just savings. But the townhouse complex has a healthy contingency fund, has a strong reputation of being problem free, and the building is in excellent shape. Knock on wood.

  22. Whups, just did my monthly finances and I actually make a bit LESS than your fixed income… you should totally be golden :)

    Regarding higher mortgage payments: I didn't save as much as you on a monthly basis… My lender allowed me to double the payments and, down the road, I could skip payments as many times as I doubled. So I figured that it was kind of an emergency fund that saved me interest. If I needed to, I could stop paying the mortgage – up until the end of the term, anyway, and by that time, it was mostly paid off.

  23. I'd like to know why you decided on the fixed mortgage rate as opposed to the variable rate. The more I learn about the differences the more I find that the variable rate is a much better option. A big one I learned about recently is that the penalty for breaking the mortgage is much lower for the variable rate (equal to 3 months interest).

    • I went with a fixed rate because I work on a strict budget that does not offer flexibility in terms of a fluctuating mortgage payment. I work better with structure, and knowing that my payments are going to be the same every month. Especially because I have some major savings goals to obtain in the next few years.

      Yes, I probably could have learned to adapt to a different style of budgeting, but for me, I chose security – which comes at a cost. Plus, interest rates are only going to go up from here, and the 3.74% rate I have is quite favourable over a 5 year period.

      • Actually, depending on where you got your mortgage a variable rate mortgage can still have the same mortgage payments. What happens when the interest rates go up is that the proportion of the payment that goes to interest will increase. So if your payment is $500, and of that amount $250 is interest and $250 goes to the principle, when interest rates go up then maybe $255 is interest and $245 goes to the principle. This in turn increases the time needed to pay off the mortgage, so if you signed up for a 30 year for example, and the interest rates go up then maybe it will take 31 years or more. With the money you save with a lower interest rate from the variable rate, you can use the rapid pay down options that is offered such as increasing each payment to reduce the amortization period down to even less than 30 years. Not to mention the penalty for breaking a mortgage. For a fixed rate it will be a complex formula so that the bank can recoup all their "losses". But a variable rate mortgage will always be the interest of 3 months. I've read articles where homeowners had to pay anywhere from $10,000 to $30,000 to break their fixed rate mortgages.

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