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Harvey Spector

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2 minutes ago, Warhippy said:

Thanks mate.  Honestly stars aligned like nothing else.  I know the owner as we're old friends.   Didn't realize he'd put the place up at all.  Messaged him and he said it's listed for X give me a fair offer.  So I did, went back and forth and signed the vacate notice for his tenants the other day.  Gave them 60 days+ to make sure they weren't rushed out for the holidays and a couple of rental listings from people we know for them so they weren't screwed over for a place during the winter.

 

Home inspection report on the high end will be about $17,000 to clear.  Most of that is regarding foundation and grading of the property.  Old crawl space, no drainage; rats in it.  HVAC system needs to be moved.  2 sewer lines and only 1 goes to the street other too????

 

Lifting the house and putting in a proper foundation will cost about $40,000; $45,000 if we make it a walk out access.  Another $15,000 to reset the garage after and move the HVAC and hot water tank to the basement mechanical room after it's done.  So all in about $60,000 on the foundation.  Need to remodel the back 1/3 of the house, kitchen bath and 2 odd rooms.  Take out a door, move a window.  So yes lots of work and I know cost overruns...but it will be ours. and nobody else's.  The only comparable we've found for this size of 1480 in a house is about $520,000.  

 

Once we've lifted it and put in the basement it will have effectively doubled the space and the only comparable in and around the 2600+ sq ft range with a new bathroom, new kitchen and garage/backyard are closer to $700,000

 

We're stoked man.  Luckily we're not doing much with or about wood and I know the local contractors and supply stores so getting it all at cost or reduced won't be an issue

 

image.png.6f1249f3ac7bc6b1bde5505bc9cf6cc7.png

thats great. You would have really hated Alberta. 

 

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7 minutes ago, Warhippy said:

We pulled the plug after the new government got elected.

 

After seeing what they've done to things and property values.  We pulled the plug.

wise move. 

 

Not sure what your plans are for the basement. We redid ours (1947 rancher) and went with foam against the cement with furring strips for putting up the paperless drywall over top instead of building out a  traditional wood frame wall. The foam is the insulation and the vapour barrier so its pretty slick. Its really easy and warm as heck. 

 

Curious to hear what that second sewer line does.... 

Edited by Robert Long
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3 minutes ago, Robert Long said:

Curious to hear what that second sewer line does.... 

Guessing it originally went to a septic and then they added city sewer later...?

 

Congrats @Warhippy and I'm with Jimmy/Robert. You would have hated Alberta :lol:

 

FWIW, we're LOVING our place over on the island. Only three years old vacation home that was only lived/vacationed in for about 6 months of those three years. 2400 sqft and backs on to green space and a trail system that the boys and I have been exploring all summer and fall. Got to see salmon spawning up the creek a few times in the last few weeks as well :)

 

Been busy building fencing to keep deer out of the raised garden beds I've also been building for the wife. Oh and building a nice new king bed frame as well. The house itself, thankfully, doesn't need much of anything.

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  • 1 year later...
On 1/6/2022 at 11:31 AM, Warhippy said:

With thr housing assessments out recently I wanted to bump this in memory of Harv.

 

Miss ya bud.

 

Tick, Tock

Just reading about your reno. Hows it going?

 

Sounds exactly like mine down to the rats in the crawl space but im not lifting my rancher or building out the basement rather converting the garage into a living space/suite and renoing the rest of the house. Bought the cheapest house I could find in Victoria for $420k (5 years ago). Assessed now at $750k and not even done reno yet so assessed value is really still based on original condition.

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15 hours ago, AV's Coin said:

Just reading about your reno. Hows it going?

 

Sounds exactly like mine down to the rats in the crawl space but im not lifting my rancher or building out the basement rather converting the garage into a living space/suite and renoing the rest of the house. Bought the cheapest house I could find in Victoria for $420k (5 years ago). Assessed now at $750k and not even done reno yet so assessed value is really still based on original condition.

As long as the government doesn’t take the capital gains exemption away putting your money into a Reno is the smartest play right now. Especially if you can do some of the work. Good luck.

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6 hours ago, themcdeal said:

Hey Boomers,

 

How do I afford a house in the lower mainland? Someone give me a plan here. 

Besides cutting out the avocado toast. I'll never give that up. 

Maybe invent something?

Win a lottery?

Design and sell NFT's? whatever they are...

 

Give up your daily Latte, never mind that won't be enough.

 

I know, move.... many great places in BC. The whole province will keep increasing in price as BC is soo desirable, you will be making a good investment wherever you go. Just don't over extend. 

 

Most important. Never, ever give up your Avocado toast. 

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On 1/11/2022 at 5:17 PM, AV's Coin said:

Just reading about your reno. Hows it going?

 

Sounds exactly like mine down to the rats in the crawl space but im not lifting my rancher or building out the basement rather converting the garage into a living space/suite and renoing the rest of the house. Bought the cheapest house I could find in Victoria for $420k (5 years ago). Assessed now at $750k and not even done reno yet so assessed value is really still based on original condition.

@AV's Coin honestly it's dead in the water right now.

 

Every single contractor I am talking to right now is looking towards spring/summer working in merrit, princeton and abbottsford area.  There are something like 4000 homes and businesses that need rebuilding and it will almost all be government money or insurance.  Having done government/insurance work in the past I assure you I can/could make 3x what i would have doing standard levels of work.

 

If I worked 2 hours a day but was on site for 8 I was getting paid for 8.  With travel, food and lodging all paid.

 

Plus inflation.  In 2 years the cost of everything has sky rocketed.  We have good friends that took a small 900 sq ft home, tore the roof off and built a 2 level, 2000 sq foot home around it.  3 bed 2.5 bath and left the 2 bedroom as a separate home/suite for their parents and the building costs 3 years ago came out to around $300,000 for it all.  brand new homes essentially.  My sister is building a 700 sq foot 2 car garage and adding a 1 bedroom plus den carriage suite above it and the cost for that is almost $300,000 alone.  The difference is 3 years on that.  That's with my brother in law doing most of the work.  It's absolutely insane 

 

I will add they are putting in a solar bank, have paved their driveway etc upgraded electrical in home and bought new wood burning high efficiency heating for their main home.  But that cost is crazy.

 

I am doing about 900 sq feet.  1 full bath, 1 half bath.  New flooring in entire house.  home levelling on floor joists to move in to beam instead of rock and cinder.  Digging out some of the crawl space.  Furring in an exterior wall to move water lines and furnace.  New 12 foot run to add heat in to other room.  Upgrading plumbing lines throughout the house.  Replacing 1 full sized window, 1 patio door, 1 small bathroom window.  Walling in 2 windows and 1 door and adding a full window in the room the door is being walled out of.  And new kitchen.  

 

That is my reno bill and the costs I am hearing are upwards of $150,000 with me doing the demo and leg work.  That's absolutely outrageous and the bulk of that is material cost which is insane.  Because I am not actually putting much in the way of material in at all.  I already have all new appliances, I have friends willing to do the work but the contractors I am speaking to are out of their gourds with the budget and cost.  I figured it was an $80 k job, $95k tops with painting and upgrading ceiling/insulation but nope.....

 

Honestly, I might bite the bullet and do one room at a time and all the essentials because hearing that I'm around $150,000 and 6 months worth of labour has me gun shy and not interested until the market falls out or prices come down.

 

On a plus note, I think I DO have the rat issue entirely taken care of so that's good.  Am hoping costs do come down so I can actually fix the covered carport/garage up a bit.  insulate it, put in a small shed in the back yard to move non essential things like winter tires, bikes and such.  That would give me a viable studio space to work in.  but...that's a dream at this point with the costs I keep hearing.

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Looking for advice/opinions here. I'm 28, single/single income, and bought my first place last year. 1BR condo in Cloverdale/Langley. It's 2 blocks from one of the proposed Skytrain stations and 4 from another, so I think it has good potential as something to sell later on or to keep as an income property. Right now it costs me about $1500 per month for mortgage, strata, and insurance. Hypothetically, in a few years if I had a girlfriend/wife to move out with I could rent this place out and likely bring in a bit of profit each month.

 

Now here's where I'm nervous. I qualified for my mortgage on a 5 year variable rate at 1.5% (variable rate was the mortgage broker's recommendation). Obviously since I qualified I can afford my place. Where I get nervous is at the though of climbing interest rates. Despite the stress test, I'm not entirely confident I could keep paying my mortgage if interest rates climbed to >5%. I'm almost certain that if they hit say >6.5% I would default on my mortgage within a year, assuming my income hasn't changed meaningfully in that time (which of course is something that is possible. I'm not ruling that out). We've all seen the way our cost of living in general has increased so much the last few years and will continue to for the foreseeable future with the way inflation is going. 

 

I paid $367K for this place with 20% down ($73 500), $20K of which was a "gift" from my parents. There's been three comparable units in my building that have sold since I moved in, with the most recent being a unit one floor below me that sold for $390K in December. A guy I work with is in the market for a 1BR and I half-jokingly told him I'd part with mine for $400K, to which he said he'd do it. Selling this place for $400K would mean I'd be walking away with about ~$106K, right? Minus the $20K back to my parents and there was some sort of first-time buyers program or exemption I qualified for that the mortgage broker told me I'd have to pay back I think it was $15K if I sold or rented this place out within the first year of ownership. Tack on some fees for realtors/lawyers (I guess I could cut out a realtor in this scenario? Maybe? Might also be a terrible idea, not sure) on top of that, and I could walk away from a $400K sale of my unit with maybe $60K in my pocket? Obviously it would suck to lose that $15K for the first-time owner thing, but my thinking here is this: Even with that penalty, I'd be walking way from here with a profit of several thousand in just a few months time. More importantly, I'd be walking away from the risk of defaulting on my mortgage. 

 

I read about the debt crisis in Canada and it makes me worry about what the market could look like in a few years. I can't remember the exact numbers, but I've read that if interest rates climbed something like 3 or 4%, a fairly significant 'X' number of Canadians would default on their mortgage within a year. A precipitous situation, no doubt. I can only assume that this would lead to a fairly meaningful market correction, right? My thinking was what if I sell my place, sit on my cash or maybe safely invest it somehow and keep saving in the meantime, then try to buy back into the market after the correction? "Buy the dip", so to speak.

 

I'm not really sure what to do. Money's tight for me and I worry about this a lot. Hell, I'm only eating about 10-12 meals per week these last few weeks to save money after getting hit with a special levy to pay for some relatively minor damage to the building caused by the flooding in November. I buy what's on sale, live a cheap social life (dog walks with friends, hang out at home and split a 6 pack, etc), don't heat my home and spend my time at home with the lights off other than when I'm cooking. I've gone over it several times and I'm not sure where I could pare back my expenses much more. I don't want to talk to my parents about it, mostly because I feel they've already helped me enough but also because it's a little embarrassing. My anonymity amongst you fine folks helps. And before some boomer wants to tell me to shut up and work harder or something to that effect. I spent a little more than a year working two full-time jobs as well as coaching baseball/doing hitting lessons to save up the down payment for this place. I ran off about 5 hours of sleep split into two naps. It was only 5 years ago I was coming out of uni with about $35K in debt. I've been working my ass off and pinching pennies for several years now to climb out of that debt (which at one point seemed completely insurmountable and is really the reason I always worry so much about money now) and get into the market. I don't want to end up catching a falling knife here.

 

I apologize for the long windedness but I had to talk to somebody about it. And yes, in order to continue to pay my mortgage post-interest hike I could pick up a second job again. Currently I still coach baseball and do a bit of side work for my uncle in addition to my full time job. I should've added that it's not just simply the ability to pay the mortgage that worries me, but also being stuck with a place that's seriously devalued and having a mortgage that's not commensurate with its value anymore (a la the US in 2008 on a more minor scale I guess?)

 

Thanks to anybody who takes the time to read this. If you have any sort of advice I'd love to hear it.

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22 minutes ago, Sean Monahan said:

Looking for advice/opinions here. I'm 28, single/single income, and bought my first place last year. 1BR condo in Cloverdale/Langley. It's 2 blocks from one of the proposed Skytrain stations and 4 from another, so I think it has good potential as something to sell later on or to keep as an income property. Right now it costs me about $1500 per month for mortgage, strata, and insurance. Hypothetically, in a few years if I had a girlfriend/wife to move out with I could rent this place out and likely bring in a bit of profit each month.

 

Now here's where I'm nervous. I qualified for my mortgage on a 5 year variable rate at 1.5% (variable rate was the mortgage broker's recommendation). Obviously since I qualified I can afford my place. Where I get nervous is at the though of climbing interest rates. Despite the stress test, I'm not entirely confident I could keep paying my mortgage if interest rates climbed to >5%. I'm almost certain that if they hit say >6.5% I would default on my mortgage within a year, assuming my income hasn't changed meaningfully in that time (which of course is something that is possible. I'm not ruling that out). We've all seen the way our cost of living in general has increased so much the last few years and will continue to for the foreseeable future with the way inflation is going. 

 

I paid $367K for this place with 20% down ($73 500), $20K of which was a "gift" from my parents. There's been three comparable units in my building that have sold since I moved in, with the most recent being a unit one floor below me that sold for $390K in December. A guy I work with is in the market for a 1BR and I half-jokingly told him I'd part with mine for $400K, to which he said he'd do it. Selling this place for $400K would mean I'd be walking away with about ~$106K, right? Minus the $20K back to my parents and there was some sort of first-time buyers program or exemption I qualified for that the mortgage broker told me I'd have to pay back I think it was $15K if I sold or rented this place out within the first year of ownership. Tack on some fees for realtors/lawyers (I guess I could cut out a realtor in this scenario? Maybe? Might also be a terrible idea, not sure) on top of that, and I could walk away from a $400K sale of my unit with maybe $60K in my pocket? Obviously it would suck to lose that $15K for the first-time owner thing, but my thinking here is this: Even with that penalty, I'd be walking way from here with a profit of several thousand in just a few months time. More importantly, I'd be walking away from the risk of defaulting on my mortgage. 

 

I read about the debt crisis in Canada and it makes me worry about what the market could look like in a few years. I can't remember the exact numbers, but I've read that if interest rates climbed something like 3 or 4%, a fairly significant 'X' number of Canadians would default on their mortgage within a year. A precipitous situation, no doubt. I can only assume that this would lead to a fairly meaningful market correction, right? My thinking was what if I sell my place, sit on my cash or maybe safely invest it somehow and keep saving in the meantime, then try to buy back into the market after the correction? "Buy the dip", so to speak.

 

I'm not really sure what to do. Money's tight for me and I worry about this a lot. Hell, I'm only eating about 10-12 meals per week these last few weeks to save money after getting hit with a special levy to pay for some relatively minor damage to the building caused by the flooding in November. I buy what's on sale, live a cheap social life (dog walks with friends, hang out at home and split a 6 pack, etc), don't heat my home and spend my time at home with the lights off other than when I'm cooking. I've gone over it several times and I'm not sure where I could pare back my expenses much more. I don't want to talk to my parents about it, mostly because I feel they've already helped me enough but also because it's a little embarrassing. My anonymity amongst you fine folks helps. And before some boomer wants to tell me to shut up and work harder or something to that effect. I spent a little more than a year working two full-time jobs as well as coaching baseball/doing hitting lessons to save up the down payment for this place. I ran off about 5 hours of sleep split into two naps. It was only 5 years ago I was coming out of uni with about $35K in debt. I've been working my ass off and pinching pennies for several years now to climb out of that debt (which at one point seemed completely insurmountable and is really the reason I always worry so much about money now) and get into the market. I don't want to end up catching a falling knife here.

 

I apologize for the long windedness but I had to talk to somebody about it. And yes, in order to continue to pay my mortgage post-interest hike I could pick up a second job again. Currently I still coach baseball and do a bit of side work for my uncle in addition to my full time job. I should've added that it's not just simply the ability to pay the mortgage that worries me, but also being stuck with a place that's seriously devalued and having a mortgage that's not commensurate with its value anymore (a la the US in 2008 on a more minor scale I guess?)

 

Thanks to anybody who takes the time to read this. If you have any sort of advice I'd love to hear it.

I've always had variable mortgages.

They have worked out for me but there is an increased risk as you describe. If you are worried, talk to your bank and see if you can lock in at a fixed rate. 

 

I am a believer that the market will not drop too much for too long if it does at all. I just don't think we have the inventory.

 

You're in a great area and that sky train station will have a positive effect on your home value.

Put it this way, I would have said I'd buy your place for $400k too if I was that guy. Maybe sight unseen.

 

So, my advice is to hold on. But I am just a dude online. Ask as many people as you can that have experience and done well in the market.

 

You're about where I was equity wise at your age. Maybe I'm an example of you talking from the future...I  didn't over extend myself, I did worry, but I stayed optimistic and patient.

 

One more piece of advice, go find someone to love. You're a smart guy that is in shape, land yourself a well deserved life partner. 

 

One of the ways my wife and I had great success is that we are DINKS. 

Double Income No Kids.  Helps pay the bills obviously.

 

Good luck Sean. 

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8 hours ago, bishopshodan said:

I've always had variable mortgages.

They have worked out for me but there is an increased risk as you describe. If you are worried, talk to your bank and see if you can lock in at a fixed rate. 

 

I am a believer that the market will not drop too much for too long if it does at all. I just don't think we have the inventory.

 

You're in a great area and that sky train station will have a positive effect on your home value.

Put it this way, I would have said I'd buy your place for $400k too if I was that guy. Maybe sight unseen.

 

So, my advice is to hold on. But I am just a dude online. Ask as many people as you can that have experience and done well in the market.

 

You're about where I was equity wise at your age. Maybe I'm an example of you talking from the future...I  didn't over extend myself, I did worry, but I stayed optimistic and patient.

 

One more piece of advice, go find someone to love. You're a smart guy that is in shape, land yourself a well deserved life partner. 

 

One of the ways my wife and I had great success is that we are DINKS. 

Double Income No Kids.  Helps pay the bills obviously.

 

Good luck Sean. 

Thanks Bish. I feel like I kinda digressed on that post. I’m not “working poor” quite yet and I do the cost saving measures so I can build up some savings, even if it is at a snail’s pace. I moved into this place with less than <$2K in savings after putting it all into the down payment and associated costs, which is why I feel I’m so vulnerable to rising interest ratings. 
 

I just wanted some opinions on the legitimacy of my fears. I know I’m a person with a propensity for worrying too much- on the plus side, that worrying makes me do some good things too, like saving money.  If I can afford to do it I know that keeping this place is the smarter play. Even with a correction, I imagine I’ll see that value fully recover and probably more, just gotta keep making the payments on it. My fear is not realizing I won’t be able to make payments until it’s too late. “Optimism and patience”- I’ll have to work on this :lol:
 

 

All my friends are DINKS (save for one who had his first on Christmas Day) so I’ve seen all the benefits. While I was shopping for a 1BR, my friends were all moving into 2BR’s or townhouses. My buddy and his wife just outside Edmonton are 26 and 27, respectively, and own both sides of a side by side duplex that they rent as well as a detached home they live in with a suite. The three properties net them $100 per month. They’ve got a combined income of about $150K per year. There simply isn’t that kind of getting ahead for the vast majority of people in Vancouver. I know Edmonton isn’t exactly postcard pretty, but it really makes a guy think…

 

 

Funny enough you mention the SO part. I went on a first date today, and a dog walk turned into 4.5 hours and going for a coffee before I ever looked at the time. Maybe I’ll have a mortgage helper before too long, who knows.

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9 hours ago, Sean Monahan said:

Looking for advice/opinions here. I'm 28, single/single income, and bought my first place last year. 1BR condo in Cloverdale/Langley. It's 2 blocks from one of the proposed Skytrain stations and 4 from another, so I think it has good potential as something to sell later on or to keep as an income property. Right now it costs me about $1500 per month for mortgage, strata, and insurance. Hypothetically, in a few years if I had a girlfriend/wife to move out with I could rent this place out and likely bring in a bit of profit each month.

 

Now here's where I'm nervous. I qualified for my mortgage on a 5 year variable rate at 1.5% (variable rate was the mortgage broker's recommendation). Obviously since I qualified I can afford my place. Where I get nervous is at the though of climbing interest rates. Despite the stress test, I'm not entirely confident I could keep paying my mortgage if interest rates climbed to >5%. I'm almost certain that if they hit say >6.5% I would default on my mortgage within a year, assuming my income hasn't changed meaningfully in that time (which of course is something that is possible. I'm not ruling that out). We've all seen the way our cost of living in general has increased so much the last few years and will continue to for the foreseeable future with the way inflation is going. 

 

I paid $367K for this place with 20% down ($73 500), $20K of which was a "gift" from my parents. There's been three comparable units in my building that have sold since I moved in, with the most recent being a unit one floor below me that sold for $390K in December. A guy I work with is in the market for a 1BR and I half-jokingly told him I'd part with mine for $400K, to which he said he'd do it. Selling this place for $400K would mean I'd be walking away with about ~$106K, right? Minus the $20K back to my parents and there was some sort of first-time buyers program or exemption I qualified for that the mortgage broker told me I'd have to pay back I think it was $15K if I sold or rented this place out within the first year of ownership. Tack on some fees for realtors/lawyers (I guess I could cut out a realtor in this scenario? Maybe? Might also be a terrible idea, not sure) on top of that, and I could walk away from a $400K sale of my unit with maybe $60K in my pocket? Obviously it would suck to lose that $15K for the first-time owner thing, but my thinking here is this: Even with that penalty, I'd be walking way from here with a profit of several thousand in just a few months time. More importantly, I'd be walking away from the risk of defaulting on my mortgage. 

 

I read about the debt crisis in Canada and it makes me worry about what the market could look like in a few years. I can't remember the exact numbers, but I've read that if interest rates climbed something like 3 or 4%, a fairly significant 'X' number of Canadians would default on their mortgage within a year. A precipitous situation, no doubt. I can only assume that this would lead to a fairly meaningful market correction, right? My thinking was what if I sell my place, sit on my cash or maybe safely invest it somehow and keep saving in the meantime, then try to buy back into the market after the correction? "Buy the dip", so to speak.

 

I'm not really sure what to do. Money's tight for me and I worry about this a lot. Hell, I'm only eating about 10-12 meals per week these last few weeks to save money after getting hit with a special levy to pay for some relatively minor damage to the building caused by the flooding in November. I buy what's on sale, live a cheap social life (dog walks with friends, hang out at home and split a 6 pack, etc), don't heat my home and spend my time at home with the lights off other than when I'm cooking. I've gone over it several times and I'm not sure where I could pare back my expenses much more. I don't want to talk to my parents about it, mostly because I feel they've already helped me enough but also because it's a little embarrassing. My anonymity amongst you fine folks helps. And before some boomer wants to tell me to shut up and work harder or something to that effect. I spent a little more than a year working two full-time jobs as well as coaching baseball/doing hitting lessons to save up the down payment for this place. I ran off about 5 hours of sleep split into two naps. It was only 5 years ago I was coming out of uni with about $35K in debt. I've been working my ass off and pinching pennies for several years now to climb out of that debt (which at one point seemed completely insurmountable and is really the reason I always worry so much about money now) and get into the market. I don't want to end up catching a falling knife here.

 

I apologize for the long windedness but I had to talk to somebody about it. And yes, in order to continue to pay my mortgage post-interest hike I could pick up a second job again. Currently I still coach baseball and do a bit of side work for my uncle in addition to my full time job. I should've added that it's not just simply the ability to pay the mortgage that worries me, but also being stuck with a place that's seriously devalued and having a mortgage that's not commensurate with its value anymore (a la the US in 2008 on a more minor scale I guess?)

 

Thanks to anybody who takes the time to read this. If you have any sort of advice I'd love to hear it.

I would definitely keep the apartment, all things considered it's a great investment to hold long term and everyone needs to live somewhere in the meantime. Assuming you aren't going to want to move in the next 10-15 years and the age/shape of the building/complex is decent.

 

In regards to finding a way to comfortably make the payments, my risk adverse finance style always leans me to the fixed rate. I like to know what I am paying and 5 years is a long term to get locked in for, I renewed mine at 1.9% 5 year fixed recently. I am around your age and stretched on my monthly payments, a little bit, but I also like to bet on myself and think my income potential will increase by the time I renew my mortgage again. I would think you can switch from variable to fixed probably for some nominal penalty fee. Just another option besides selling.

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23 minutes ago, Chicken. said:

I would definitely keep the apartment, all things considered it's a great investment to hold long term and everyone needs to live somewhere in the meantime. Assuming you aren't going to want to move in the next 10-15 years and the age/shape of the building/complex is decent.

 

In regards to finding a way to comfortably make the payments, my risk adverse finance style always leans me to the fixed rate. I like to know what I am paying and 5 years is a long term to get locked in for, I renewed mine at 1.9% 5 year fixed recently. I am around your age and stretched on my monthly payments, a little bit, but I also like to bet on myself and think my income potential will increase by the time I renew my mortgage again. I would think you can switch from variable to fixed probably for some nominal penalty fee. Just another option besides selling.

To be quite honest- and this really shows how naive I am with this stuff- I’d panicked so much that I hadn’t even considered into looking at switching to a fixed rate. My broker weighed the pros snd cons with me and sold me on the variable last spring but fixed rate might help with my worries. 

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12 hours ago, Sean Monahan said:

To be quite honest- and this really shows how naive I am with this stuff- I’d panicked so much that I hadn’t even considered into looking at switching to a fixed rate. My broker weighed the pros snd cons with me and sold me on the variable last spring but fixed rate might help with my worries. 

going with variable right now seems a bit sketch when rates are at an all time low, but i'm sure there are some valid reasons

 

here is a good place to start, hard to say what the exact penalty would be to switch might be easiest to read your contract or ask the bank directly

 

Breaking your mortgage contract - Canada.ca 

 

Mortgage fees: Prepayment penalties - Canada.ca 

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22 hours ago, Sean Monahan said:

Looking for advice/opinions here. I'm 28, single/single income, and bought my first place last year. 1BR condo in Cloverdale/Langley. It's 2 blocks from one of the proposed Skytrain stations and 4 from another, so I think it has good potential as something to sell later on or to keep as an income property. Right now it costs me about $1500 per month for mortgage, strata, and insurance. Hypothetically, in a few years if I had a girlfriend/wife to move out with I could rent this place out and likely bring in a bit of profit each month.

 

Now here's where I'm nervous. I qualified for my mortgage on a 5 year variable rate at 1.5% (variable rate was the mortgage broker's recommendation). Obviously since I qualified I can afford my place. Where I get nervous is at the though of climbing interest rates. Despite the stress test, I'm not entirely confident I could keep paying my mortgage if interest rates climbed to >5%. I'm almost certain that if they hit say >6.5% I would default on my mortgage within a year, assuming my income hasn't changed meaningfully in that time (which of course is something that is possible. I'm not ruling that out). We've all seen the way our cost of living in general has increased so much the last few years and will continue to for the foreseeable future with the way inflation is going. 

 

I paid $367K for this place with 20% down ($73 500), $20K of which was a "gift" from my parents. There's been three comparable units in my building that have sold since I moved in, with the most recent being a unit one floor below me that sold for $390K in December. A guy I work with is in the market for a 1BR and I half-jokingly told him I'd part with mine for $400K, to which he said he'd do it. Selling this place for $400K would mean I'd be walking away with about ~$106K, right? Minus the $20K back to my parents and there was some sort of first-time buyers program or exemption I qualified for that the mortgage broker told me I'd have to pay back I think it was $15K if I sold or rented this place out within the first year of ownership. Tack on some fees for realtors/lawyers (I guess I could cut out a realtor in this scenario? Maybe? Might also be a terrible idea, not sure) on top of that, and I could walk away from a $400K sale of my unit with maybe $60K in my pocket? Obviously it would suck to lose that $15K for the first-time owner thing, but my thinking here is this: Even with that penalty, I'd be walking way from here with a profit of several thousand in just a few months time. More importantly, I'd be walking away from the risk of defaulting on my mortgage. 

 

I read about the debt crisis in Canada and it makes me worry about what the market could look like in a few years. I can't remember the exact numbers, but I've read that if interest rates climbed something like 3 or 4%, a fairly significant 'X' number of Canadians would default on their mortgage within a year. A precipitous situation, no doubt. I can only assume that this would lead to a fairly meaningful market correction, right? My thinking was what if I sell my place, sit on my cash or maybe safely invest it somehow and keep saving in the meantime, then try to buy back into the market after the correction? "Buy the dip", so to speak.

 

I'm not really sure what to do. Money's tight for me and I worry about this a lot. Hell, I'm only eating about 10-12 meals per week these last few weeks to save money after getting hit with a special levy to pay for some relatively minor damage to the building caused by the flooding in November. I buy what's on sale, live a cheap social life (dog walks with friends, hang out at home and split a 6 pack, etc), don't heat my home and spend my time at home with the lights off other than when I'm cooking. I've gone over it several times and I'm not sure where I could pare back my expenses much more. I don't want to talk to my parents about it, mostly because I feel they've already helped me enough but also because it's a little embarrassing. My anonymity amongst you fine folks helps. And before some boomer wants to tell me to shut up and work harder or something to that effect. I spent a little more than a year working two full-time jobs as well as coaching baseball/doing hitting lessons to save up the down payment for this place. I ran off about 5 hours of sleep split into two naps. It was only 5 years ago I was coming out of uni with about $35K in debt. I've been working my ass off and pinching pennies for several years now to climb out of that debt (which at one point seemed completely insurmountable and is really the reason I always worry so much about money now) and get into the market. I don't want to end up catching a falling knife here.

 

I apologize for the long windedness but I had to talk to somebody about it. And yes, in order to continue to pay my mortgage post-interest hike I could pick up a second job again. Currently I still coach baseball and do a bit of side work for my uncle in addition to my full time job. I should've added that it's not just simply the ability to pay the mortgage that worries me, but also being stuck with a place that's seriously devalued and having a mortgage that's not commensurate with its value anymore (a la the US in 2008 on a more minor scale I guess?)

 

Thanks to anybody who takes the time to read this. If you have any sort of advice I'd love to hear it.

 

your answer lies in looking at the basic calc - can you afford the extra $180 per month for certainty?  https://www.tangerine.ca/en/products/borrowing/tangerine-mortgage/.  run your current scenario vs a fixed one and see if you can handle the cost. So from tangerine e.,g. 1.5% 5 year variable is 1,200 per month.  5 year fixed is 1380. 

 

We went the other way from a lot of people last year and went for a 10 year mortgage, locked in at 2.1%. For us the bit of extra cost was worth the certainty as we're looking at early retirement and wanted to lock in our last mortgage and eliminate that risk.

 

You are on the other end of things, just starting out but also in a risky climate. If you can switch to a lower cost mortgage provider (assuming the penalty to get out isn't too high) that could help things as well. We really had a good experience with Tangerine and see no reason to pay more to BMO e.g. for the pleasure of it. 

 

 

 

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13 hours ago, Sean Monahan said:

To be quite honest- and this really shows how naive I am with this stuff- I’d panicked so much that I hadn’t even considered into looking at switching to a fixed rate. My broker weighed the pros snd cons with me and sold me on the variable last spring but fixed rate might help with my worries. 

When I had a mortgage I used coast capital variable rate product, not sure if it's still the case but the rate was variable but the payment remained locked in for the term. Now yes if rates rise, more of your payment goes to interest leaving a bigger payment when you refinance in 2-5 years but the good news is at that point if you can't afford the payment you can renew the payment back to a 25 year amortization assuming you have over 20% equity they'll happily do this again bringing down your monthly payment, albeit you'll take longer to pay off your loan in this worst case scenario.

 

I used this strategy when I had my first kid. My wife was off work so a big hit to income I refinanced my mortgage back out over 25 years and brought my payment from $1550 down to $1200/month which helped our cash flow situation.

 

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9 minutes ago, Muckalt classic said:

When I had a mortgage I used coast capital variable rate product, not sure if it's still the case but the rate was variable but the payment remained locked in for the term. Now yes if rates rise, more of your payment goes to interest leaving a bigger payment when you refinance in 2-5 years but the good news is at that point if you can't afford the payment you can renew the payment back to a 25 year amortization assuming you have over 20% equity they'll happily do this again bringing down your monthly payment, albeit you'll take longer to pay off your loan in this worst case scenario.

 

I used this strategy when I had my first kid. My wife was off work so a big hit to income I refinanced my mortgage back out over 25 years and brought my payment from $1550 down to $1200/month which helped our cash flow situation.

 

https://www.coastcapitalsavings.com/mortgages/member-get-it-mortgages#membersratetable

 

Looks like the same still applies... they're offering $$ towards fees for switching your mortgage to them too. Might be worth talking to them.

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