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  • Home Ownership: What Are The Monthly Costs ?

    Author: Laura Chanin Date: August 3, 2015

    Most people aspire to own real estate, in part because they need somewhere to live and owing your own place provides security. At the same time by paying down the mortgage each month, you are building equity. Real estate is a tangible asset which is also satisfying for people.


    But how much mortgage can you really afford? When you buy a home, whether it is a condo or townhouse or house, there will be maintenance costs. There are also utility costs i.e. BC Hydro and/or Fortis Gas. Many cities charge water and utility costs throughout the year. Monthly you will also have property taxes that are based on the value of your home. In all these costs can be a significant amount of money.


    But the biggest cost for a new homeowner, particularly in Vancouver will be the mortgage. Mortgage rates are very low, but will increase at some point in the future. We donít know when, but when they do increase mortgage costs will also increase.


    Here is an example for someone wanting to purchase a new place at a cost of $400,000. In some parts of Canada that might get you a beautiful home. In Vancouver, it is probably a condo.


    Ideally you have 20% downpayment, or $80,000. Otherwise there are insurance costs added to the mortgage amount. In this case a $320,000 mortgage at 3% interest would be $1,514/month

    Here is a sample of the monthly costs:

    -Mortgage $1,514

    -Maintenance $200

    -BC Hydro $50

    -Fortis $50

    -Property Taxes $200

    -Utility $50

    -Total monthly costs $2,064/month


    After living in the home for 5 years and paying the mortgage regularly, the outstanding balance will have decreased to $273,518.

    The banks and financial institutions have ratios that show the maximum that each person is allowed to borrow for a mortgage based on their income. To find out how much, it is best to contact a mortgage advisor for prequalification.

    So, the monthly costs of home ownership do add up. How much will it really cost you depends on the place you are looking at. You also need to consider your financial goals and the rest of your financial picture. Ideally you donít end up house poor with no money to do anything else. It is important to balance your goals and investments. To help make an informed decision, please contact a CERTIFIED FINANCIAL PLANNER ® practitioner.

    Mortgages First-Time Buyer Financial Planning Financing

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Author : Laura Chanin
This article was prepared by Laura Chanin who is an Investment Advisor with DWM Securities Inc., a DundeeWealth Inc. Company. This is not an official publication of DWM Securities Inc. and the author is not a Dundee Securities analyst. The views including any recommendations expressed in this article are those of the author alone, and they have not been approved by, and are not necessary those of, DWM Securities Inc..