We’ve been discussing real estate in great detail around here. You know what to do before you apply for a mortgage or why young people are clueless about real estate. Today we’re going to go in a bit of a different direction. I wanted to get into the actual money spent on a place to live in.
One area of buying a home that we haven’t gone into yet is the actual price of a decent property. How much would you spend on a place? This includes the final price of the home on the closing date, not your actual down-payment or what the value can change to over the years.
Former UFC fighter Chuck Liddell threw down some serious money to buy a home. Liddell bought himself a 6,000 sq ft mansion for $2.6 million. Would you like to have 5 bathrooms and live close to Kim Kardashian? I would answer yes to one of those (won’t say which one).
For me spending money on a place should depend solely on your current income and not what you plan on making in the future. There’s really no guarantee that you’ll have a job tomorrow, let alone a job making more money than ever before. It’s dangerous to expect your income to increase drastically in the future while buying a home because you don’t want to get too much house or to be stuck in a place that you can’t afford. It’s tough to accept in your 20s that you’re not going to become a millionaire anytime soon. However, you need to be realistic when considering your future income because you don’t want to be stuck with insane mortgage payments. You’d have to say goodbye to those annual trips.
On another note, everyone is different when it comes to buying a place and the amount of money spent on a home. Some of us will want to spend all of our savings on the dream home. Others will want to spend as little as possible on a home so that they can continue their lifestyle. This is why I had so much fun writing the real estate debate that you need to join piece a few weeks ago. We’re all totally different when it comes to buying a place and we’re all willing to spend different amounts of our income on a home.
We all also have different plans when it comes to location. One person is willing to pay significantly more to live downtown, while the next person wants to live in the country side and pay less money to enjoy a more peaceful lifestyle. On that note, the person living downtown wants to walk to work and have a upbeat city lifestyle. The person in the rural area wants to settle down and doesn’t mind driving a little bit to get into work every day.
How much are you going to spend on your first home purchase? If you’re already a property owner, how much did you spend on your first home purchase?
For me, how much I’m going to spend on a place depends on what the monthly mortgage payment will be. If I can get a mortgage payment close to what I would be paying in rent, then I think I’ve found a good deal. My partner and I were able to buy a condo with 5% down and still keep our mortgage payment the same as when we were renting.
You still need to leave a buffer for interest rate increases and property tax/strata fees, however this is a good general rule to follow
Is that the total payment? What about the condo fees?
The mortgage payment is roughly $930 on a one bedroom condo. Including strata fees ($190) and saving for taxes, we put aside $1250 per month.
Yes, this is a bit higher than a one bedroom rental in the area, but considering the equity we are generating, this falls into my ‘good deal’ category.