I went with a fixed five-year, 25-year amortization rate of 5.89% (the lowest rate at the time).
The Bank of Canada has cut rates four times since then, and if I had waited a few more months or gone for an adjustable-rate mortgage, my payments would have been much lower.
The mortgage payment is also only one part of the cost. After I added up all the debts like property taxes ($172), condo fees ($495), condo insurance ($27) and utilities ($86), I realized that a smaller loan would make more sense. I still had to balance food, daily living expenses (basic necessities are more expensive in Calgary than Toronto) and transportation (since Calgary is so spread out you have to drive everywhere!). This leaves little room for savings, debt payments or community service.
4. You should do your due diligence when buying a property
I hired a third party firm to do an audit of the condo's reserve fund and finances (another $415). Although the expert told me that the reserve fund was not where it needed to be, I bought the property. I've already been hit with a special assessment (about $1,400) to cover the operating and maintenance fund shortfall and there may be more to come.
5. You must have a plan B
After burning through my savings so quickly and having to put everything into debt, I wish I had planned ahead on how to manage it. Not only have I had to consciously cut back on spending and say no to many fun occasions, I've had many sleepless nights worrying about money.
The best places to buy real estate in Canada
Hto prepare to buy your first home
Kenneth Doll, a Certified Financial Planner (CFP) in Calgary, says it's not uncommon for people to go in head first when buying their first home. He says that banks are in the business of lending money and when a new buyer starts getting a loan, the bank makes the interest rate higher.
“I think there are a lot of people who can't afford to buy as much as they can, and then they end up poor in the house or, God forbid, someone loses their job or whatever, and they actually get arrested,” said Doll.
Although CMHC recommends spending no more than 32% of income on housing, Doll says everyone's situation is different. He advises prospective homebuyers to have a conversation with a financial planner to discuss their income, expenses, savings and debts to get the most of the house they can actually afford—against what the bank or Google search says they can.
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