Montreal Couple Purchases Townhouse with 28% Down on $425k Income
In a notable real estate transaction, a Montreal couple recently purchased a townhouse valued at $710,000, putting down 28% of the price. Their success in affording this home is attributed to a robust combined income of approximately $425,000, significantly bolstered by Adam’s individual earnings of around $350,000.
Details of the Purchase
Adam, an associate portfolio manager aged 27, diligently saved for six years, setting aside nearly 45% of his after-tax income. Utilizing his tax-free savings account (TFSA) and first home savings account (FHSA), he invested the remainder in reliable assets, opting for lower-risk options such as Government of Canada bonds due to the impending home purchase.
When it came time to secure a down payment, the couple raised $200,000, which covered the 28% required. Adam’s contribution consisted of:
- 66% from non-registered accounts
- 24% from the FHSA
- 10% from the TFSA
The remaining portion of the down payment was generously gifted by his fiancée’s family. Adam considers this family assistance, along with favorable market conditions, essential in achieving their homeownership goal.
Budgeting for the Future
Though pre-approved for a $1.1 million mortgage, the couple chose to be conservative in their approach. Adam painstakingly created a detailed budget spreadsheet to evaluate their potential housing costs against their desired lifestyle. The budget accounted for all expenses including:
- Utilities
- Property taxes
- Home insurance
- Maintenance
- Emergency funds
- Future vehicle needs
This rigorous financial planning ensured that homeownership would not interfere with key pursuits, such as travel and family gatherings during holidays.
Mortgage Details
After extensive discussions with financial professionals, the couple settled on a 25-year amortization with a five-year variable mortgage. This arrangement features an interest rate one percentage point below the bank’s prime rate, resulting in monthly payments of about $2,600.
Flexibility was paramount in their mortgage choice, as they intended to view the townhouse as a stepping-stone to a future home. By locking in this mortgage during a period of expected interest rate cuts, Adam felt confident in their financial position to cope with potential rate fluctuations.
Renovations and Furnishing
Since moving in, the couple has invested approximately $8,000 in renovations, focusing on aesthetic updates. Additionally, they allocated around $35,000 for furnishing their new home. Initially overwhelmed by the responsibilities of ownership, Adam now expresses joy in hosting gatherings and adapting to life as homeowners.
Cost Breakdown
The following outlines the main costs associated with their home purchase:
| Item | Cost |
|---|---|
| Purchase Price | $710,000 |
| Down Payment (28%) | $200,000 |
| Home Inspection | $850 |
| Legal Fees (Notary) | $2,500 |
| Moving Truck | $2,000 |
| Land Transfer Tax | ~$14,500 |
| Renovations | $8,000 |
| Furniture | $30,000 – $35,000 |
| Monthly Mortgage Payment | ~$2,600 |
| Home Insurance | $200 |
| Utilities | ~$260 |
Adam emphasizes that purchasing a home encompasses uncertainties not easily captured by spreadsheets. He advises future buyers to approach the process thoughtfully, underlining that homeownership is more of a marathon than a sprint.
