# Is there any way I can afford a home?



## shingudaze (Jan 19, 2012)

Hi all, thank you for all the information on these forums. I've read quite a lot of it and found so much of it useful.

I just got back to Canada (Toronto), and I find myself in a messy situation where me and my wife need a place of our own. 

I have no credit to my name, bad or good, as I lived abroad for over 7 years. Just a card with a $500 limit. My wife can't work in Canada until her visa comes in, so we're living on one income.

After paying ourselves and paying our monthly bills we have $1400/mth available to us. 

No down payment available, but thankfully our parents will go to bat for us and co-sign, or directly get a loan for the home/down payment. In the end, we're looking at the full amount of the place on loan, really.

The smart option would be rent, or wait and save. I know that, but if we were to buy, what would be the smartest way?

I'll be happy to provide any other background info (for the most part) anyone might need to help out. It's hard to cover all the bases in one first message . 

This is very important to us, and I sincerely appreciate all your help.

Thanks


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## Saniokca (Sep 5, 2009)

shingudaze said:


> The smart option would be rent, or wait and save. I know that, but if we were to buy, what would be the smartest way?


You're not going to like my opinion.

Renting is not the smart option - it's the ONLY option. And here's why:
1) Borrowing from family is never a great idea - it changes the relationship.
2) 1 income - you lose that do you go back to your parents?

Even a 100k place is too much in your case.


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## Lost on Me (May 23, 2011)

*I side with this fella*

http://www.greaterfool.ca


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## Mall Guy (Sep 14, 2011)

Let's see someone on CMF is siding with Garth Turner . . . Garth where have you been ? I missed the bus ride to Ottawa . . . sorry


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## Saniokca (Sep 5, 2009)

Lost on Me said:


> http://www.greaterfool.ca


I was SO tempted to post the same thing... Garth is awesome


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## HaroldCrump (Jun 10, 2009)

Garth is hilarious.
I read his blog for pure entertainment.
He has made a spectacle of himself with his outrageous predictions and being wrong time and again, not to mention his political theatre.
I think he has the dubious distinction of being the only politician to be kicked out of every single federal political party in Canada (except the Bloc)

He fancies himself as a investment advisor, too (may God help his clients).

He has been calling for a RE crash for over 5 years now.
Sooner or later, he will be right (sometime in the next 100 years, I guarantee you)


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## Cal (Jun 17, 2009)

IMO the smart thing to do is rent for a year......don't rush into things.


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## Saniokca (Sep 5, 2009)

I read it for entertainment only because he says the same thing. I happen to agree with it though. 

Harold, the longer it takes for his predictions to come true - the worse it will be for us as a nation. We should stop before we steal the thread...


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## jcgd (Oct 30, 2011)

Cal said:


> IMO the smart thing to do is rent for a year......don't rush into things.


I say rent until it makes sense to buy in Toronto. Renting will be way cheaper until prices are more affordable.

Even then, OP, you seem to be in no financial shape to buy a house. You should read up on The Royal Mail's tiers, and see how you stand.


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## Sherlock (Apr 18, 2010)

Any possibility of moving out of Toronto? 100k will buy a decent detached home in Windsor. If you don't mind something small and old you can find it for 50k.


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## Four Pillars (Apr 5, 2009)

shingudaze said:


> if we were to buy, what would be the smartest way?


Everyone else in the thread has provided the best advice (don't buy), but if you do buy - clearly the smartest way is to buy cheap. 

Not sure what areas you are thinking about, but if it's anywhere in the city - you need an old cheap condo. If you are in the burbs (ie Ajax or further east) then maybe an older, smaller house?


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## arie (Mar 13, 2011)

*own*

you must be dreaming in technicolour on this one

how do you plan on buying with no money down---no one will give you a mortgage even if you borrow the downpayment -- you simply do not have sufficient funds at this time in your life

$1400 is just ridiculous to think you can buy a home in toronto- i am not sure if this post is a joke


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## Saniokca (Sep 5, 2009)

arie said:


> you must be dreaming in technicolour on this one
> 
> how do you plan on buying with no money down---no one will give you a mortgage even if you borrow the downpayment -- you simply do not have sufficient funds at this time in your life
> 
> $1400 is just ridiculous to think you can buy a home in toronto- i am not sure if this post is a joke


I wish this were true. I am 99% sure that he WILL get a mortgage. And much higher than you think.


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## the-royal-mail (Dec 11, 2009)

An apartment can be your home. In that respect, you can more likely afford a home.


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## Jon_Snow (May 20, 2009)

I like the "joke post" theory... it just has to be.


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## jcgd (Oct 30, 2011)

Cough, trolling, cough. 

Jk, if everyone actually could afford their houses (gasp at the atrocity) then where would we be with our affordable homes and low debt levels?


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## the-royal-mail (Dec 11, 2009)

I'm normally one of the first ones to call BS on trolls, but I'm not sure that's the case here. If you re-read the original post, you will see where the OP says they clear $1400 net disposable income _every month_. That seems quite respectable and not trollish in the least.

There are trolls in CMF for sure but I'm not presently convinced the OP is one of them.


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## jcgd (Oct 30, 2011)

Trm, I don't think the op is a troll. I was just kidding around.


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## kcowan (Jul 1, 2010)

OP
You need your parents to buy the house for you. As mentioned already, this will change the relationship.


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## Mall Guy (Sep 14, 2011)

HaroldCrump said:


> Garth is hilarious.
> I read his blog for pure entertainment.
> He has made a spectacle of himself with his outrageous predictions and being wrong time and again, not to mention his political theatre.
> I think he has the dubious distinction of being the only politician to be kicked out of every single federal political party in Canada (except the Bloc)
> ...


A broken clock is right twice a day !


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## Mall Guy (Sep 14, 2011)

Four Pillars said:


> Everyone else in the thread has provided the best advice (don't buy), but if you do buy - clearly the smartest way is to buy cheap.
> 
> Not sure what areas you are thinking about, but if it's anywhere in the city - you need an old cheap condo. If you are in the burbs (ie Ajax or further east) then maybe an older, smaller house?


Don't disagree, but since reserve fund studies became the norm, condo fees in older building can be huge.


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## shingudaze (Jan 19, 2012)

Hi all, thanks for your replies. I've had strep throat and been bedridden, sorry I couldn't jump back in sooner. 

Okay, so to respond:

Renting is a good suggestion, and an option for us (we're looking at some rentals too), but off topic, so I'll leave those posts alone. 

As for the rest, I thank you for your opinions and I think moving out of the GTA into a quaint little place, older and in need of fixing up even, would be perfectly acceptable to us. 

We've spent the last 7 years living in a peaceful countryside, I wouldn't mind trading the city for something like that again if we could. Of course the difference is that now I need to be in the city for work, so travelling would be a big concern.

So... I work at Woodbine Avenue and Steeles Avenue, and would like to (if possible) keep travel time between 30 and 45 minutes, but beggars can't be choosers. 

What areas might be good to shop around?

Finally, no this post isn't a joke. We were forced to move back to Canada sooner than expected, so we don't have the savings for a downpayment we would have liked, that's why I'm asking if there's a way we can still accomplish the purchase of a home at all.


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## MoneyGal (Apr 24, 2009)

shingudaze said:


> Finally, no this post isn't a joke. *We were forced to move back to Canada sooner than expected, so we don't have the savings for a downpayment we would have liked,* that's why I'm asking if there's a way we can still accomplish the purchase of a home at all.


Consider that the purchase of a home ties you to a large, illiquid, non-tradeable asset. You don't have any other liquid financial assets. What happens if something else beyond your control disrupts your plans after you've bought a house?


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## shingudaze (Jan 19, 2012)

I agree, this is one of the biggest fears we have. The biggest problem being if we can't afford a payment at any time along this journey, we'll be in big trouble. It doesn't seem so bad now, assuming my job is safe and things are only going to get better, but if they didn't...


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## MoneyGal (Apr 24, 2009)

There is a way to hedge against that risk. Several ways, actually: 

(1) Don't expose yourself to it. Keep renting. 

(2) Get a sufficiently large downpayment so that your total payments are small. 

Is there a pressing reason for you to own, rather than rent? 

Also, you should be aware that interest rate increases will reduce the affordability of a home purchase even if your jobs and income stay the same.


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## kcowan (Jul 1, 2010)

There are townhouses in the Warden/Steeles area that should be reasonable rentals.


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## Homerhomer (Oct 18, 2010)

shingudaze said:


> So... I work at Woodbine Avenue and Steeles Avenue, and would like to (if possible) keep travel time between 30 and 45 minutes, but beggars can't be choosers.
> 
> What areas might be good to shop around?
> 
> .


None unfortunately, real estate market is crazy hot right now, mortgage of $250K would run you around $1200 per month (assuming a rate of 3.5%) but how would you pay for property taxes, upkeep, utilities and extra travel expenseses? Anything within that price range would only be land value, even Keswick and Sutton don't have properties below $250K and that's over an hour drive each way.
Just look at MLS.ca, unfortunately in your current situation you just can't afford it, wait until you can. If you want to purchase real estate you have to find ways of bringing quite a bit more money and save for a solid downpayment.


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## canadianbanks (Jun 5, 2009)

shingudaze said:


> Hi all, thank you for all the information on these forums. I've read quite a lot of it and found so much of it useful.
> 
> I just got back to Canada (Toronto), and I find myself in a messy situation where me and my wife need a place of our own.
> 
> ...


I wouldn't buy a house if I was in your situation (single income, no down payment). On top of that the Canadian housing market is bubbly and this increases your risks. That being said the bubble might continue to inflate for a year or two as long as the interest rates are suppressed successfully.


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## Saniokca (Sep 5, 2009)

Seems like the thread should have been called "I have no money but will do anything to buy a house, now you guys should tell me how to do this." You should consult a realtor and a broker - they are great at this.

I can bet that you will end up buying shingudaze. And it might work out, but the same could be said for walking into a casino and putting all your money on red... 

It makes absolutely no sense for you to buy.


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## shingudaze (Jan 19, 2012)

Saniokca said:


> Seems like the thread should have been called "I have no money but will do anything to buy a house, now you guys should tell me how to do this." You should consult a realtor and a broker - they are great at this.
> 
> I can bet that you will end up buying shingudaze. And it might work out, but the same could be said for walking into a casino and putting all your money on red...
> 
> It makes absolutely no sense for you to buy.


The thread name is fine as it is, and your opinion has been duly noted multiple times. Thanks.


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## shingudaze (Jan 19, 2012)

kcowan said:


> There are townhouses in the Warden/Steeles area that should be reasonable rentals.


That would put me very close to work, I'm going to check it out. 

Regarding renting vs. buying, a few of my friends are renting tiny condos and paying around $1200 a month. Wouldn't it make more sense to put that $1200 towards a mortgage if you have to pay it anyway?

I have noticed basement apartments that were a lot cheaper, of course.


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## the-royal-mail (Dec 11, 2009)

OK I'll bite. Everyone here is telling you renting is a good option for you. I would also like to echo that excellent advice. Owning a house carries with it a lot of obligation and cost. Costs include taxes, fees, condo fees, levies, RE fees (when you sell), land transfer tax, lawyer fees etc etc. You don't have any of these expenses when renting. So in your example you'll be paying out a heck of a lot more than $1200/mo on a house you own. And that is based on a high down payment, low interest rates (which won't last forever) and a lot of luck. Houses today require at least a 5% down payment and since you don't have that amount saved you would be best served by spending all your time looking for a suitable rental and forget about owning a house. It's not right for you at this time.


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## shingudaze (Jan 19, 2012)

MoneyGal said:


> There is a way to hedge against that risk. Several ways, actually:
> 
> (1) Don't expose yourself to it. Keep renting.
> 
> ...


There is a pressing reason to own, but I'm not comfortable talking about it openly in forums. I'd be more than happy to discuss it in private messages if anyone is curious.

Also, I'll take a moment to say that I know everyone is trying to help and would like it reciprocated by at least knowing why I'm asking something that seems almost hopeless, but it's the "almost" part I'm clinging to.


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## MoneyGal (Apr 24, 2009)

shingudaze said:


> T Wouldn't it make more sense to put that $1200 towards a mortgage if you have to pay it anyway?


You can rent space, or you can rent money. Given your other parameters, renting space is a better choice for you. You don't have enough other assets / liquid assets to take on the huge financial commitment a mortgage would represent. 

You might find another answer on a different kind of forum - like one frequented by real estate brokers; but I doubt anyone here will tell you anything different. No one has so far. 

(And I'm not saying anything new in this post, but I wanted to respond to the quoted bit specifically.)


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## shingudaze (Jan 19, 2012)

*Update*

I was approached by family the other day and offered $20,000 interest free and payable monthly once things have settled down with work, my wife's visa, etc. to either pay off my car loan, or use towards a down payment. 

I'm currently paying $310/month for it, plus a ridiculous amount of insurance ($277/month)

So now it looks like I can either go with a paid car, giving me about $1700/month of disposable income to work with towards a home, but no down payment, or keep at $1400/month and put $20,000 down.

Which do you think is the better road?

To be honest, I'm leaning towards paying off the car and saving, but that means waiting longer for a place, and we still want to have a place asap.


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## Four Pillars (Apr 5, 2009)

Saniokca said:


> Seems like the thread should have been called "I have no money but will do anything to buy a house, now you guys should tell me how to do this."


Actually I think the thread title is accurate, but it's incomplete.

It should be "Is there any way I can afford a home? Please answer in the affirmative because I'm buying one".


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## shingudaze (Jan 19, 2012)

Again the title of the thread is fine, I never said "Is there any way I can afford a home because there is no way in hell I'm going to rent or stay with my parents." 

It's a sliver of hope I was searching for, and I understand renting is probably the route we'll end up going.

As a bit of a slap in the face, we were saying how great it would be to live near our folks for the support, dinners, etc, when just yesterday the house right across the street from them went up for sale 

Thanks to all that have helped to date.


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## MoneyGal (Apr 24, 2009)

shingudaze said:


> So now it looks like I can either go with *a paid car*, giving me about $1700/month of disposable income to work with towards a home, but no down payment, or keep at $1400/month and put $20,000 down.


But you *won't* have a paid car. You'll have transformed a car loan into a family loan. Whether it is interest-free or not doesn't change the fact that it is still due and payable. 

I don't think anyone here is being deliberately mean or unhelpful. I think providing you a "sliver of hope" based on false premises would be mean. What people are saying is IF fairly unsustainable conditions continue in place, you MIGHT be OK - but house-poor - if you buy a house. 

If your parents want you to own a house, perhaps they should buy you one, or give (not loan) you a much bigger downpayment.


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## Spudd (Oct 11, 2011)

What % interest are you paying on your car loan? If it's >0, I would take the interest-free loan and then put the $300/mo to paying back the family loan. Once that's paid back, you can save for a downpayment. 

I understand the wish to move out from your parents, but real estate in Toronto is really expensive and with your cash flow of $1400/mo disposable, I don't think you can really afford to. You certainly can't afford a house. If you want a condo, you have to pay condo fee on top of the mortgage. If you move to the country instead (like Newmarket or something) it's more affordable but then you need a long commute and a car is not an option. At least in the city you can get by with one car (or none, depending on circumstances).


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## Homerhomer (Oct 18, 2010)

Spudd said:


> If you move to the country instead (*like Newmarket or something*) it's more affordable but then you need a long commute and a car is not an option.


More affordable is correct, however nowhere near affordable for OP, last time I looked (a day or two ago), the cheapest semi-detached home in Newmarket was listed for $330K. There is couple of detached homes lited below that but they are pretty much land value. There is nothing around GTA OP can afford, sorry but that's the truth, even Oshawa prices went up drastically, add their high property taxes on top and there is still nothing OP can buy.

The only possible way around it is to buy a house where you can rent out a basement (and prey for good paying tennant), but even that option is not affordable for OP, and given the situation no institution should give you mortgage.


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## shingudaze (Jan 19, 2012)

It might come down to that, thanks.


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## Homerhomer (Oct 18, 2010)

If you are referring to renting basement out, it is an option, however it is not an option for you right now. Houses with potential income are at a premium, the possible income you may generate does not count toward mortgage application, your income right now doesn't justify $350K mortgage.

Earn more, save more, and in the meantime do what's necessary and not what you would like to do. If you can't live where you are right now then rent a cheap place, on paper home ownership doesn't look that expensive, add mortgage, utilities, maintanance (it adds up quickly and is very expensive unless you are very handy yourself), costs of damages caused by tennants (the house you will be purchasing won't be rented to professionals working on Bay street, you will really need to be lucky to get good tennants which don't do damage and pay rent each month) cost of additional transporation and it really is not as cheap as some calculations may indicate.


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## shingudaze (Jan 19, 2012)

No, we were refering to me and my wife renting a basement apartment as tenants. We are not thinking of purchasing a home to rent the basement.

Thanks for the reply.


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## Homerhomer (Oct 18, 2010)

shingudaze said:


> No, we were refering to me and my wife renting a basement apartment as tenants. We are not thinking of purchasing a home to rent the basement.
> 
> Thanks for the reply.


Glad to hear that.

I hope in few years you will be able to achieve your goal on home ownership ;-), good luck


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