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.
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.
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.
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.
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.
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.