Author Topic: Your thoughts on my path forward  (Read 636 times)

jimmeh

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Your thoughts on my path forward
« on: May 14, 2019, 02:07:07 PM »
Hello,

I am brand new to this site and see my self reading the blog for the next 5 hours. I always appreciate outside input in to my financial situation (Canadian).

I'm 33 years old. I have no debt, I have a paid for house worth $330,000, and have saved $58,000 in a TFSA. The TFSA is individual high dividend stock. I have a further $53,000 in an RRSP through work. I have already used my Home Buyers Plan. I make $87,000 (Net) with my current salary, and my wife makes $60,000 (Net). Both jobs have a pension. The house has a monthly $500.00 condo fee.

Im considering the options of saving to buy my next house in full, or renting the current house I have and saving a larger down payment. Reason for upgrade is we have a little one on they way. Condo is 1 bedroom 1000 SQ, would like something larger but not ridiculous. I live in Hamilton, Ontario close to Toronto. Over $500,000 is about the next level up in most cases.

I was wondering if anyone has any advice or has been in a similar situation and could offer some insight.

Cheers

RWD

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Re: Your thoughts on my path forward
« Reply #1 on: May 14, 2019, 02:21:18 PM »
What are interest rates like up in Canada? You have a rather high percentage (75%) of your net worth tied up in your home equity. I would definitely consider getting a mortgage for your next residence.

Your current condo fee is ridiculous.


jimmeh

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Re: Your thoughts on my path forward
« Reply #2 on: May 14, 2019, 02:44:18 PM »
The rates are typically 3-3.5% for a five year term.

ejmyrow

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Re: Your thoughts on my path forward
« Reply #3 on: May 14, 2019, 04:43:17 PM »
Congratulations! You are doing so well!
Hmm... the question of whether to buy a larger house. How many bedrooms does your current house have? Do you really need a larger house? Could you get rid of some stuff and actually feel like you have more space to live in?

I learned an important lesson from my folks when I was 8 years old. They moved into a house that was twice as large as the old one, however they ended up working significantly more and spending less time at home and with family.
I would get another house if you see it as a good investment (i.e. if you can rent your current place in an exchange that greatly favors you). I imagine that when your child is born you'll want to want to maximize for quality time with them.

jimmeh

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Re: Your thoughts on my path forward
« Reply #4 on: May 14, 2019, 07:02:50 PM »
Hey,

Thanks for the reply. It's a one bedroom condo. I failed to mention we have a small dog as well. I don't need a massive house thats for sure. The GTA is quite insane for housing costs.

frugaldrummer

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Re: Your thoughts on my path forward
« Reply #5 on: May 16, 2019, 11:19:57 AM »
$330,000 condo with $500 monthly fee - how much would you have to rent that for in order to make it profitable versus simply selling and rolling all the money into a new home? Doesn't sound like it would pencil out as an investment property unless rents are sky high.

Also, 1,000 SF is large for a one bedroom - I'm assuming there's no den that could be converted into a bedroom or other means of adding a bedroom to the condo you have?

I'd probably just sell the condo, roll all that money over into a new place, then work on either paying down the mortgage or saving up an equivalent amount in investments.  BUT I would wait until 6-12 months after the baby is born in case there are unforeseen complications (i.e. wife doesn't want to return to work, or baby ro mom  has health issues making returning to work unfeasible). Hopefully all will be well but unexpected things can happen around childbirth etc. and what you THINK you will want to do after the baby is born may very well not be what you WANT to do once the baby is born. Leaving a small child with caregivers is often less than optimal and I wouldn't tie yourself into a higher mortgage until you're well into that first year.