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:
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?
Author: Krystal Yee
I’m a 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, climbing, playing field hockey, or plotting my next adventure.