Give Me Back My Five Bucks

We are homeowners!

I honestly cannot believe how fast the last two years have flown by. Life has changed so much, and back in the summer of 2015, I never would have guessed that I’d meet someone as amazing as RD, and that we’d be settling down and planning the rest of our lives together.

Before we decided we wanted to buy a home, we spent a few months going through all the possible scenarios that life could throw our way in the next 10-15 years. We thought about where we wanted to live, what kind of space we wanted, what our lives would look like, and whether we wanted kids or a pet (or maybe both). In the end, we agreed that Vancouver is where we’ll be until we retire. And because of that, we decided to make home ownership a goal with the idea that whatever we end up buying, we’ll be living there for the long-term.

I know, buying real estate in Vancouver in 2017 is crazy, right? Maybe, yeah. But we have good jobs and a nice amount of money saved, and we are both level-headed enough to not buy anything out of our comfort level. So even though we were pre-approved for a mortgage of about $850,000, we set a top end budget of $475,000.

Location

We didn’t struggle at all on where we wanted to live. I’ve always been in love with New Westminster (where I owned my townhouse, and also where I rented an apartment years earlier). It’s just got a strong community vibe, and since our budget wasn’t going to buy us a 2-bedroom home where we currently live in Mount Pleasant (that would have cost us about $800,000), it was the obvious choice. Especially considering my commute would only increase by 10 min., and RD’s commute actually gets shorter.

The Search

We targeted a very specific area in New Westminster and started our home search by getting pre-approved for a mortgage in early March. We wanted to have our finances sorted out just in case something amazing came onto the market. Weeks went by. We saw a lot of bidding wars, condos that regularly went for $100,000 over asking … and we went to a lot of open houses, but most places just didn’t suit us for one reason or another. It’s not that we were being overly picky, we just knew exactly what we wanted.

Related: Thoughts on our open house tour

One day we went to view a 2 bed/2 bath condo in a high rise building. It had a great layout, floor-to-ceiling windows, and an amazing view from the gigantic balcony – but we’d have to do work just to move in (replace carpet, fix doors, etc), and that would have taken us over our budget. So we reluctantly passed. The following week, we saw another unit just a few floors down which required no updating, and the views were just as stunning. But that price point was at the very top of our self-imposed budget, and we just assumed everything was going to sell over asking (like all the other condos we had viewed). So we left the open house and didn’t consider it a contender.

The next week, I noticed the listing was still online, so I messaged my Realtor and asked if it was still available – and to our surprise, it was! So we snuck in a low ball offer, and after a bit of negotiating, we ended up getting it for about $10,000 less than list price.

The Financials

We had a $125,000 down payment, and decided to use $115,000 towards the home, holding back $10,000 for closing and moving costs. So no, we didn’t end up meeting our original goal of $150,000 towards a home, but I really feel pleased with the amount we were able to save.

Our purchase price was $468,000. And after the down payment, our mortgage will be $353,000.

The mortgage amount represents 2.2x our combined gross annual salary, and all housing expenses come out to 23% of our combined net monthly income – this is based on our full-time jobs alone. Even though I have consistently made a nice chunk of freelance income every year, we decided to only get pre-approval (and create a budget) based on our secure income.

Related: My biggest home buying regret – not considering the future

And what kind of PF blogger would I be if I didn’t include a mock budget? :) This time the chart below indicates our joint household expenses, and what we expect to put into our joint account every pay cheque. We’ve also built in a nice buffer each month which will serve as our household savings fund for emergencies and future large household expenses.

We pay $1,650/month for rent right now, and as you can see our base housing costs (mortgage/strata/property tax) is $2,045/month. While normally I would scoff at such a big increase to our living expenses, we are both absolutely ok with it because we knew we were going to move eventually (and that it would cost us more money), but also::

  • We can still comfortably pursue our financial goals of early retirement and travelling every year.
  • 2-bedroom apartments cost on average $2,500/month to rent in Vancouver, and about $2,000 in New Westminster (units for rent in our building are going for $2,200+).
  • We will be able to sell RD’s car and go down to a one-car household.
  • The building has a nice gym (eliminating the need to continue to pay drop-in fees at the rec centre).
  • Crazy amount of natural light and a large patio (our current home has zero outdoor space and very minimal natural light).
  • A little more space (we’re going from 680 sq.ft. to 825 sq.ft.).
  • A usable second bedroom for guests, and RD can have a small art area.
  • The ability to have a small garden on the patio.
  • Pet-friendly, so we can finally get a cat.

Even though we have decided to buy a home, I am (and will always be) a fan of renting. For some, owning in Vancouver will never be an option, and there’s nothing wrong with that. What’s the point of stretching yourself to the limit just to buy a home? Renting is a fantastic choice for many people, because owning a home only makes sense if 1) your monthly housing expenses are on par with renting, 2) you’ve decided to settle down in one place for the long term, and 3) you aren’t stretching yourself to the point where your lifestyle and retirement savings are compromised.

Related: When renting is better than home ownership

We don’t take possession until mid-June when RD comes back from his annual 5-week field work trip, and we’ll officially be moved in by the end of June. But there’s a lot to do in the meantime! I’ll need to get quotes from painters and movers, change over our insurance, update addresses, as well as start to sort through our stuff for selling or donating.

Anyway, there you have it! I’m surprised but happy that we bought a home so quickly, and we are both looking forward to settling into our new home. :)

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.


Comments

  1. strandedrocks says:

    Congratulations Krystal and RD,

    This is exciting news! I was looking forward to this post after finding out you had purchased a home. I like how you budget by paycheque instead of monthly, that’s how I do it too.
    It really shows how much time and research went in to the purchase, I would do it the same way.
    Good luck with the de-cluttering, packing and organizing.

    • Krystal Yee says:

      Thank you so much! I think the budgeting exercise was really helpful for RD because while he’s good with his money, he’s never kept a detailed budget. It was hard for him to picture what the mortgage & all associated housing costs actually looked like coming out of each pay cheque until I broke it down like that. It was also helpful for me because I’ve never been responsible for a household budget before, just my own. :)

  2. Marlon says:

    Congratulations!! It sounds like you really did your homework and didn’t succumb to last minute anxiety and pressure. So happy for you! Best wishes getting all settled in!

    • Krystal Yee says:

      Thank you! :) I think the big thing for us was that we would have been ok continuing to rent if we couldn’t buy exactly what we wanted in our price range. Having that mindset definitely eliminated any thoughts of trying to compete in bidding wars or buying something out of our comfort zone.

  3. Aki says:

    what mortgage rate you went with? Fixed or variable? Any reason for big down payment when interest rates r low and market can give better return

    • Krystal Yee says:

      We went with a 5-year fixed with TD (used a mortgage broker). In terms of our big down payment, we knew we were going to put down 20% anyway, and going up to 25% was about $21,000 more so it wasn’t a big enough amount to be concerned with getting a better return from investing. I think we would have considered it more if we were looking at a bigger chunk of money.

  4. Jess says:

    Do you have any plans to get married? Congrats on the new home

  5. Leigh says:

    Congrats on the condo! I love that you guys used the amount for a down payment that you wanted, rather than only putting down a specific percentage.

    My husband and I have a similar overall joint budget ($3,000/month), so it’s interesting to me to see how ours differ. We probably should have put a bit more buffer into ours – we only ended up with about $147/month for miscellaneous and we definitely want to increase the joint accounts buffer eventually. (Right now it’s at one month’s expenses and we would ideally like to get it up to three.) I’m surprised that you don’t have a line item for condo maintenance and projects at all. I’ve tracked my spending on this religiously over the last five years and I have spent $2,328.38 on average, so that is in our budget.

    If you’re a one car household and car insurance is in your budget, why aren’t the other car expenses like fuel, maintenance, and annual registration? What about shared travel costs? Will you just budget for those as they happen?

    • Krystal Yee says:

      Hi Leigh, thanks for your comment!

      So our goal is to use our buffer to cover condo maintenance and renovation projects. We will also use the sale of RD’s car as padding to that joint account. Our hope is that having a $5,000ish pad from the car sale, and the buffer contribution each month (which works out to $4,400/year) will be enough to keep us going. I also had budgeted for $100 in miscellaneous expenses every month which will also add to the buffer. If we find we need to save more, then we’ll adjust accordingly.

      As for car expenses, we decided for now that we will split the cost of insurance. The cost of gas will come out of our own separate accounts, as we don’t consider transportation to/from work a joint expense (I have a bus pass to pay for to get to work).

      Car maintenance and travel – we will split those expenses and budget as those expenses come up, like we currently do.

      This is our first crack at joint expenses and a joint account together, and I think it will work for us. But we are both open to modifying/adjusting if we find that it’s not working. Thankfully our housing costs are on the lower end, so we have a decent amount of flexibility in our budget. :)

      • Leigh says:

        That sounds like a pretty reasonable buffer then! That’s fair on the cost of commuting being a separate expense. My husband’s bicycles are separate expenses, for example, and if I was still drive-commuting, that would be too. Right now, we mostly drive together though so we made gas a joint expense.

        Good luck! It’s definitely taken us many iterations to find what works best for us and I’m sure you will too :)

  6. Liquid says:

    Congrats on being a homeowner again. My mortgage payment is around $800/month as well. It’s a good thing interest rates are so affordable. Are you going to have a housewarming party? :D

    • Krystal Yee says:

      Why, are you looking for an invite? :P We haven’t talked about a housewarming party yet, perhaps once we’ve moved in and get settled we will!

  7. Vadym says:

    Congrats on your purchase!

    Regarding the financial side I feel that to fully calculate cost of ownership you need to add possible gains in case your down payment was invested.

    For instance if down payment was invested and returned 5% annually (growth and fixed income – balanced portfolio) that would amount to roughly $520 per month. So in your case owning expenses could be 2,045 + 520 which is 2545.

    • Krystal Yee says:

      It’s a good point that over the long run, you’d probably make more money investing than in home ownership. But I don’t feel that $500+/month is an appropriate amount to add, because you also have to factor in that our monthly housing costs comes out to below market value compared to rent, there would be capital gains tax on the investments, and real estate will appreciate over time. Likely not as much as investing, but still something. It will be interesting to see what the final numbers are 10-15 years down the road.

  8. Joel says:

    Congratulation on becoming a home-owner again! I like your idea to break down expenses by individual per pay cheque.

    Where are line items for travel or entertainment?

    Wouldn’t your goal of finally getting a cat conflict with travelling every year? Pet ownership might hamper flexibility to travel out-of-country for extended periods.

    • Krystal Yee says:

      Great questions! For travel, we will split those expenses and budget for them as they come up, like we’ve been doing for the past year. As for entertainment, we have budgeted in some room for restaurants, but other entertainment (like movies or concerts or events) we like to treat each other to those things, so that’s why it doesn’t show up in our joint expenses as a line item. :)

      And yes, we discussed how getting a cat would affect our extended traveling. But in the end, we feel like we have enough of a friends network in the neighbourhood who could help us (and we would in turn help them). And if there’s a trip where that wouldn’t work, we would have to budget in someone to come to the house for cat visits (there are a couple of highly rated businesses in the neighbourhood that do it).

  9. Paula Gould says:

    Congratulations on this first home purchase! You have done everything right and I love that you’re getting a cat. Look at your local SPCA, there are some good critters to be found there…..

    • Krystal Yee says:

      Thank you! I’ve owned a home before, but RD hasn’t and he’s very excited. :) We will definitely be checking out the SPCA and a few cat orphanages too when we are ready to get our cat!

  10. Tawcan says:

    Congrats Krystal & RD. New Westminster seems to be an upcoming neighborhood in metro Vancouver. The accessibility with skytrain does it make a great location. Housing expenses account for 23% of net monthly income is pretty good, that’ll still allow you to save for the future.

    • Krystal Yee says:

      Thanks! Yes it will be interesting to see how New West develops over the next 5-10 years. I really like their Mayor and his vision for the future.

  11. Allison says:

    Congratulations! I’ve been reading your blog for years, but I don’t think I’ve ever left a comment. Have you factored in the future cost of daycare? (I know the decision to have kids is a personal one, so feel free to ignore me if you’d rather not address it). I was born and raised in Vancouver and always dream of moving back, but the cost of daycare is always what ruins it.

    • Krystal Yee says:

      Thank you! Yeah I do sometimes think about daycare costs, along with all the other costs associated with having a kid. Many of my friends have children so I hear a lot about the expenses and how competitive it is to even get a daycare spot. But if we ever do want to have kids in Vancouver, I don’t think daycare costs would hold me back. I guess because I see so many of my friends finding ways to manage the costs as well as housing, it doesn’t seem as daunting? If kids ever entered the picture we’d just have to switch financial priorities. Less travel and sports gear I guess. :) Maybe that’s a naive way of thinking, I’m not sure.

      • Allison says:

        That’s a good attitude! And maybe the NDP will win the election, and you’ll have $10/day daycare :)

        • Jess says:

          I doubt Krystal is an NDP supporter, she is quite vociferously anti union, anti government.

          • Allison says:

            I wasn’t implying she was. Doesn’t matter to me how she votes – that’s up to her.

          • Krystal Yee says:

            Oh I didn’t realize I was anti union and anti government?

            • Jess says:

              Based on your previous posts, you wrote a few years ago about how you believed unions encouraged laziness

              http://www.givemebackmyfivebucks.com/2014/06/25/pros-cons-union/

              Maybe anti-government was incorrect. I was talking about a few years ago when you wrote about how Quebec students striking shouldn’t have been doing so. Your posts in the past have indicated a strong right-wing stance, so I doubt you would be voting NDP (although I would be pleasantly surprised if you were)

              • Krystal Yee says:

                I never said I was for or against unions in that post. I was merely trying to open up a discussion about whether working for a union would lead to better wages and a happier career, as opposed to non-union jobs.

                In terms of my political view, that’s something I won’t discuss on this blog, but I’m definitely not strongly right-wing.

  12. David Leung says:

    Congrats on the purchase of your new home! I have been a long time reader of your blog. I used to own a condo in the Metrotown area but find that the recurring maintenance cost being way too high. For example, we had to replace all the windows in the building a few yrs ago; after the renos is done, a lot of ppl decided to sell and move to Brentwood Burnaby.

    Just a word of advice from me being an ex-condo owner: there will be unexpected repair/maintenance bill if you own a condo (well if it is a brand new building, maybe less so)

  13. Sorry, I’m late to the party. Krystal, congrats on being a homeowner once again. And in Vancouver – that’s even more amazing! Good luck on your journey toward financial freedom. Happy mortgage burning!

  14. Congrats on the condo purchase. Seems like a really sensible decision.

    BTW, being a one car household is amazing. We’ve been doing it for about 8 years now with no regrets. I bike to work and we only use the car for big errands and out-of-town trips. Only having one car probably saves us $5,000-$7,000 per year.

  15. Congratulations on the big news! I just read your blog post about how you sold your house to be a renter. It’s great to see you become a homeowner again!

  16. Natalie says:

    Congratulations on your new home! It’s so exciting to own your home and be able to do whatever you please to it!

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