# Mortgage - am I stretched too thin?



## anthonyb (Sep 30, 2012)

I own an older home in the Toronto area and just recently did some major house renovations adding on a rear addition adding approximately 1300 square feet.
My house currently would sell for about $800,000 and I just remortaged after my home renovations and currently owe $505,000

Both my wife and I are in our early 30's. We together bring in about $160,000 gross and currently do not owe anything else except our new mortgage of $505,000.
Mortage payments are $2400/month.
We have about $50,000 in SDRSP's and both have secure jobs with good pensions.

I know we can afford the mortgage just worried we stretched ourselves too thin. We now have the home we love after the renovations so we never want to move so dont care really what the house is worth if the market decreases/crashes. Just worried about paying back this mortgage over the next 25 years.
Thoughts?


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## heyjude (May 16, 2009)

Wellllll.....

If you lose your jobs and/or interest rates go up, way up.......you might be in a bit of a bind. If you had to sell the house, and if the market had collapsed, it would not be pretty. 

But that's just the worst case scenario, right? :encouragement:


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## Four Pillars (Apr 5, 2009)

Your question is too vague. How do you define "stretched too thin"? 

You have what I consider to be an excessive amount of debt. As Heyjude said - job losses and high interest rates are what you have to worry about.


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## Plugging Along (Jan 3, 2011)

Does it matter if people stay ou are or aren't stretched too thin? Really what would you do about it? It's after the fact now.

Only you and your wife will know. If there comes a time where one of you isn't working or wants to stay at home (for example stay home with the kids, ) will this impact your decision?


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## Jon_Snow (May 20, 2009)

My wife and I make about the same as you. In your shoes I don't think I could sleep at night. But everyone's tolerance for debt is different - ours is zero, thus we paid off our mortgage in ten years. If you are comfortable with what you are doing, who cares what a bunch of anonymous people on a message board think.


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## GoldStone (Mar 6, 2011)

Review your life and disability insurance. Are you protected if one of you dies early or becomes disabled?


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## sprocket1200 (Aug 21, 2009)

as long as you can scrimp, save, and stretch so that you can pay it down in 10 years or less, you will be fine. otherwise, the risk is too great. if you want to gamble, go to the casino


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## MoneyGal (Apr 24, 2009)

You can service the debt, so by that definition you are not "stretched too thin." 

You have limited your options: it would be difficult for one of you to stay home / change careers / adopt a different, more expensive lifestyle (everything from "diagnosed with a disease with expensive treatment options" to "adopt a child from a foreign country who requires medical treatment" to "need IVF" to "decide on private school for your kids"), and you will have a limited capacity to save outside your DB pensions and house repayment. But "stretched too thin?" Probably not. "Limited your options?" Probably yes.


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## crazyjackcsa (Aug 8, 2010)

I'd agree with MoneyGal. Your mortgage is a little more than 3X your annual salary. That's not too bad really. It does limit you a little bit though, you're just working for the mortgage, like a great many of us do. Your monthly payment is 18% of gross salary too, so that's decent.

The easy answer though, is do you feel stretched thin?


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## Square Root (Jan 30, 2010)

i'm not sure what kind of response you were expecting? Obviously you qualified for the mortgage so the bank thinks you are OK. By the generally used rules of tnumb you are OK. But as others have said it really depends on what you think. Why would you ask this question? Why would you care what we (a bunch of anonymous guys from the net as someone already said) think? Anyway good luck. Stick around and paticipate in subsequent discussion.


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## GOB (Feb 15, 2011)

3x income is quite low in today's terms (For example, the average home in Vancouver is 9-10x median income - scary!) I wouldn't worry about it if your jobs are secure.


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## MoneyGal (Apr 24, 2009)

GOB said:


> 3x income is quite low in today's terms (For example, the average home in Vancouver is 9-10x median income - scary!) I wouldn't worry about it if your jobs are secure.


Not to derail this thread overly, and with no snarkiness intended, I wonder how useful it is to compare an *average* home and a *median* salary. One of these - the average - is overly sensitive to outliers. It would be better to compare the median home and the median salary.


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## Oldroe (Sep 18, 2009)

Life Starts When the Mortgage Ends.

I would get a plan and start beating that monster down.


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## blin10 (Jun 27, 2011)

you stress too much, you bring 160k and own 505, you're perfectly fine...just try to pay 80k each year into the mortgage


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## anthonyb (Sep 30, 2012)

Thanks everyone for your feedback.
First question I should answer is, what do I care what some anonymous guys on the internet think. I don't care, but sometimes you just want to get some assurance that what you are doing is right or somewhat acceptable. I started planning a home addition and renovations and before you know it my original plans of about $125,000 turned into $200,000 once all said and done.

Our jobs are both secure, and I don't have an issue getting another job in my line of work.
We both plan on getting small increases in pay over the years, so that will help.

My plan over the first 10 years is to concentrate on paying as much of my mortgage down as possible, potentially even getting a second part time job to help. We already have a son but my wife wants to have another kid (she wants a baby girl) so I need to plan this in as there will be one year with a limited salary on her part. That is a bit of an issue so for now that is on hold until I get a year or two behind us and some cash saved up.

I like the phrase one user posted "Life starts when the mortgage ends".


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## anthonyb (Sep 30, 2012)

blin10 said:


> you stress too much, you bring 160k and own 505, you're perfectly fine...just try to pay 80k each year into the mortgage


$80K each year, that is equivalent to $6667 per month.....no chance I can do that.


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## GOB (Feb 15, 2011)

MoneyGal said:


> Not to derail this thread overly, and with no snarkiness intended, I wonder how useful it is to compare an *average* home and a *median* salary. One of these - the average - is overly sensitive to outliers. It would be better to compare the median home and the median salary.


You are right of course, but I don't know the median numbers off the top of my head. I suspect the general message remains the same.


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## thebomb (Feb 3, 2012)

blin10 said:


> you stress too much, you bring 160k and own 505, you're perfectly fine...just try to pay 80k each year into the mortgage


Oh dear God! I assume you are being sarcastic. We run about 170k income and I am stressing that our mortgage still has 105k left on it! 500 would give me a heart attack


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## GoldStone (Mar 6, 2011)

thebomb, I doubt he is being sarcastic. That's Toronto for you. Have you looked at the house prices lately? 500K mortgages must be common.


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## blin10 (Jun 27, 2011)

you're in the top 1-5% earners... I remember reading some study most people live paycheck to paycheck, I can guarantee you most people don't even prepay anything in their mortgage.. so you stress even more then the poster 



thebomb said:


> Oh dear God! I assume you are being sarcastic. We run about 170k income and I am stressing that our mortgage still has 105k left on it! 500 would give me a heart attack


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## blin10 (Jun 27, 2011)

anthonyb said:


> $80K each year, that is equivalent to $6667 per month.....no chance I can do that.


6667-2400mortgage=4267, you can't live on 4k a month ?


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## Sampson (Apr 3, 2009)

Taxes? That $80k/yr isn't $6667/month.


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## blin10 (Jun 27, 2011)

we're talking after taxes, why even post taxes


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## GOB (Feb 15, 2011)

There's nothing wrong with feeling anxious about owing $500,000, whether or not is its easily payable. This kind of mentality house prices have gone haywire.


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## Sampson (Apr 3, 2009)

anthonyb said:


> We together bring in about $160,000 gross


I thought this was a little odd, since the OP responded to blin's comments using his monthly gross income. $160,000 gross probably nets them just about $100,000 (depending on spousal breakdown and proportions).

Assuming monthly spending
$2500-$3000/month
Mortgage
$2400
that leaves $2900-$3400 per month ($35-$50k/year), even if they put 100% of this towards the mortgage, the goal of top-up payments of $80k per year is impossible.


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## blin10 (Jun 27, 2011)

OP should of stated after tax income, what's the point of telling us how much he makes before taxes...obviously if it's 100k then 80k won't work, what's with all these exact numbers... I just said roughly, you make 160 you put 80 if you can't, put whatever you want, nothing needs to be exact


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## GOB (Feb 15, 2011)

^ Perhaps I'm "old school" but I don't think a $500,000 mortgage is something to be so flippant and casual about.


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## Young&Ambitious (Aug 11, 2010)

GOB said:


> ^ Perhaps I'm "old school" but I don't think a $500,000 mortgage is something to be so flippant and casual about.


When you live in an expensive city it's the norm. We've been desensitized to $500k, $750k, $900k price tags.


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## KaeJS (Sep 28, 2010)

GOB said:


> ^ Perhaps I'm "old school" but I don't think a $500,000 mortgage is something to be so flippant and casual about.


You're not old school. I would **** myself. My mortgage is 183k and I am shitting myself.


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## KaeJS (Sep 28, 2010)

If I had a dual income of $160k gross, and equity in my home worth $300k, you know what I would do?

Move out of the city, buy a $400k home somewhere cheaper and enjoy life with a tiny mortgage payment.


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## humble_pie (Jun 7, 2009)

i'm sure that nobody means that the original poster is flippant or casual.

others in this thread are being flippant, casual, testy & worse to the point of obscenity. 

what i see is an OP with great dignity, who owns a perfect home for himself & his young family, a house he loves, a house he's just restored & enlarged, presumably to accommodate another child or more children. So moving is not the first option.

the outer circumstances are what are worrisome on a national scale. These are not the poster's fault.

as usual, moneyGal seems to have the right insight. Yes, it looks like he will squeak by, but a special unanticipated future expense may have to be surrendered.

i'm hoping it works out anthony & you've done great so far. You even survived a renovation/addition with wife, baby & jobs intact, now that's major.


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## blin10 (Jun 27, 2011)

GOB said:


> ^ Perhaps I'm "old school" but I don't think a $500,000 mortgage is something to be so flippant and casual about.


http://www.philstar.com/Article.aspx?articleId=848979&publicationSubCategoryId=471 ... 50% of canadians live paycheck to paycheck ... then I bet another 25% of the other 50% blows it away on useless stuff and don't have much savings... how do you think people start to buy houses? like right now, any type of decent condo in GTA is 300k, and when kids finish education and start working you think they have $100-200k for down payment? they are lucky to not own anything for school loans... if you have 500k mortgage and bring in 100k a year+ you are very well positioned IMO


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## anthonyb (Sep 30, 2012)

humble_pie said:


> i'm sure that nobody means that the original poster is flippant or casual.
> 
> others in this thread are being flippant, casual, testy & worse to the point of obscenity.
> 
> ...



Thanks everyone for your posts.

humble_pie - you are correct. We dont want to move, we are in love with our home and plan to stay here for the rest of our life. Yes it cost us more than we wanted, what do you expect its 2012 in a major city when houses are over valued. When we did our renovation we did not go cheap, hence the reason I spent another $200K by doing everything properly. We have a beautiful home with a nice backyard, in-ground pool, and we expect at first to live a bit cautious but hopefully over the next 10 years to pay as much as possible and get this mortgage to a comfortable level. 

As for some figures, we make about $160K-$170K together before taxes.
After tax we bring home approx $8000 per month. After our mortgage payments we are left with approx $5600 per month.
Another $2500 a month for bills, property taxes, food, etc and we are left with approx $3000 a month left over that we can put towards the mortgage, other unexpected expenses, etc.
I do plan on getting a part time job to help hammer down the payments for a little while so that should help.


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## anthonyb (Sep 30, 2012)

KaeJS said:


> If I had a dual income of $160k gross, and equity in my home worth $300k, you know what I would do?
> 
> Move out of the city, buy a $400k home somewhere cheaper and enjoy life with a tiny mortgage payment.



KaeJS, beleive me when I tell you this....I have enjoyed life to the fullest.
I am a huge soccer fan.
I went to the World Cup 2006 in Germany and the World Cup 2010 in South Africa.

I am a big boxing fan as well, have been to many big fights in Las Vegas. I have been to Vegas about a dozen times over the past 5-6 years.
Add in trips all over Canada and USA.
Been all over Europe. Portugal, Spain, Italy, France, Germany, Switzerland, Holland, and Greece.
Only place I have not been that I would love to go is England, which is on my short list.

We did live in the 'burbs' before moving closer to the city.
I had a smaller mortgage but what happens when I had a smaller mortgage is I plow through money quicker.
Bigger mortgage helps me control spending, somewhat....weird way of looking at it but helps me cut back on spending money foolishly.


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## Sampson (Apr 3, 2009)

anthonyb said:


> As for some figures, we make about $160K-$170K together before taxes.
> After tax we bring home approx $8000 per month. After our mortgage payments we are left with approx $5600 per month.
> Another $2500 a month for bills, property taxes, food, etc and we are left with approx $3000 a month left over that we can put towards the mortgage, other unexpected expenses, etc.


Wow, not bad with the estimates 

There are no two ways about it, you will feel uncomfortable until that debt gets paid down, also no easy approach. Keep the top-up payments steady and in 5 years, you'll be at 'manageable' levels.

Good luck.


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## randomthoughts (May 23, 2010)

anthonyb said:


> As for some figures, we make about $160K-$170K together before taxes.
> After tax we bring home approx $8000 per month. After our mortgage payments we are left with approx $5600 per month.
> Another $2500 a month for bills, property taxes, food, etc and we are left with approx $3000 a month left over that we can put towards the mortgage, other unexpected expenses, etc.
> I do plan on getting a part time job to help hammer down the payments for a little while so that should help.


So basically, you're fine right now. But I would think that since one of your primary goals would be to keep your dream house, the biggest risk you have is interest rates increasing from the historically low current rates. (Because you don't want to exercise the option of selling the dream house.)

So I think it would make sense to pay down the mortgage as aggressively as possible so that if interest rates double, you will still be able to afford the house comfortably.


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## thompsg4416 (Aug 18, 2010)

Personally I would had held of on the Reno's until the mortgage was nearly paid off before adding to it but hey thats me. I would also not be comfortable with that size of mortgage, its all about your comfort level! 

One way (dark) to look at it is that you could die any day and at least you'll get to enjoy the fruits of your labour now. I'm still relatively young but I've recently had a couple colleges die close to retirement. One was a year before retirement and the other 2 years before. All that stuff people put off until retirement may never get done so it can be worth while to "live in the now" .


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