Real Estate

25 year old trying to buy first home in Kitchener Area

  • Last Updated:
  • Sep 14th, 2019 8:18 am
[OP]
Newbie
Nov 25, 2016
7 posts
3 upvotes

25 year old trying to buy first home in Kitchener Area

Hey guys, just looking for some general advice and recommendations for my first home purchase and looking for some opinions regarding if my current plan is a good decision or not. I am a single 25 years old, I have a low 80k job as a Mechanical Engineer and have about $25k saved up which I plan to use as a downpayment. I am also currently able to save 50% of my aftertax income into my savings after my expenses. My workplace is loacted in Cambridge, ON and I am looking to buy something around the Kitchener Area ( Waterloo, Kitchener and Cambridge). I started doing my research for this journey very recently and would any help you guys can provide.

I can afford something up to $1600/ month payment comfortably ( this needs to include all other resultant costs like condo fees if present and property taxes). What I wanted know from you guys is what would be the best downpayment % that I should be aiming for. Should I look at properties where I can make a 10% downpayment or 5%? At the moment I do not think 20% in kind of an option for me as I would love to get into a property ASAP instead of just paying rent. Secondly I would like to know what type of a property would be best suited for me? My current plan is to get into a condo/ townhouse and eventually upgrade into a detached home, again I would love some advice here as I am currently unaware if this is the best path forward for me or not.

Also I would appreciate some advice on what would be the best amortization period for me considering I might switch to a more expensive and better property sometime in the future.
12 replies
Newbie
Sep 5, 2019
12 posts
2 upvotes
Consider the First Time Homebuyer Incentive Program. Send me a private message so we can discuss in detail. I can assist.
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Deal Addict
Jan 1, 2017
1131 posts
968 upvotes
You want to pay $1600 a month and that to include mortgage, condo fee and taxes? I don’t think you will even find a condo for that money in KW area. If you had a $350k condo the monthly mortgage payment alone would be $1500.
Deal Addict
Feb 24, 2008
2834 posts
1390 upvotes
Mississauga
$1600 all in for mortgage, taxes, condo fees? Not happening
Rent
Or get someone to join the mortgage and share expenses
Or stay at home and save more for downpayment
Sr. Member
Feb 19, 2019
814 posts
874 upvotes
Stouffville ON
With your current down payment and income the max mortgage you can qualify for is approx. $450K (roughly), which would put your monthly payments at over $2K, quite a bit higher than what you are comfortable with.
Do you have any rrsp that you can draw towards the purchase of your first home?
Your aim should be to have as big of a down payment as possible to avoid CMHC mortgage insurance, it’s money wasted you will never recover.
You can consider First Time Home Buyer Incentive plan but I would caution anyone before jumping into it, basically you are giving up 5% of the ownership of your house, if the values goes up, or you do extensive renovations to the house causing the house value to go up, you will be sharing the gains with the government.
You have few options, small house with a basement rental, 2bdr condo and rent out one room, or small 1 bdr condo under $300K, you are the only person that knows what would be the best option for you. Watch out for condo fees.
Full Time and Full Service Realtor
Member
May 22, 2019
359 posts
80 upvotes
Buy near the Conestoga college area of Kitchener. That area has the best tenants in Canada, the most precious of our country, international students.

If you have more money, buy near UW like Laurierwood area.

Don't go Cambridge, lack of exposure to foreign buyer, definitely a NO.
MunajjA402080 wrote: Hey guys, just looking for some general advice and recommendations for my first home purchase and looking for some opinions regarding if my current plan is a good decision or not. I am a single 25 years old, I have a low 80k job as a Mechanical Engineer and have about $25k saved up which I plan to use as a downpayment. I am also currently able to save 50% of my aftertax income into my savings after my expenses. My workplace is loacted in Cambridge, ON and I am looking to buy something around the Kitchener Area ( Waterloo, Kitchener and Cambridge). I started doing my research for this journey very recently and would any help you guys can provide.

I can afford something up to $1600/ month payment comfortably ( this needs to include all other resultant costs like condo fees if present and property taxes). What I wanted know from you guys is what would be the best downpayment % that I should be aiming for. Should I look at properties where I can make a 10% downpayment or 5%? At the moment I do not think 20% in kind of an option for me as I would love to get into a property ASAP instead of just paying rent. Secondly I would like to know what type of a property would be best suited for me? My current plan is to get into a condo/ townhouse and eventually upgrade into a detached home, again I would love some advice here as I am currently unaware if this is the best path forward for me or not.

Also I would appreciate some advice on what would be the best amortization period for me considering I might switch to a more expensive and better property sometime in the future.
[OP]
Newbie
Nov 25, 2016
7 posts
3 upvotes
ProductGuy wrote: You want to pay $1600 a month and that to include mortgage, condo fee and taxes? I don’t think you will even find a condo for that money in KW area. If you had a $350k condo the monthly mortgage payment alone would be $1500.
I can certainly go beyond $1600 a month. It is just I will be quite comfortable with that amount. I can increase to a certain extent depending on how good the property is. Also in this scenario, I am talking about affording the mortgage alone comfortably. If I rent out just one room, I think my ceiling can increase quite a bit considering I am just a single guy living alone. I have no idea what I will do if I get a property with more than 1 room. I am open to renting the room out. Say in the months where no one is renting, I will manage quite comfortably.
mau_mau wrote: $1600 all in for mortgage, taxes, condo fees? Not happening
Rent
Or get someone to join the mortgage and share expenses
Or stay at home and save more for downpayment
My dad will be more than happy to give me a hand. Its just I personally want to avoid taking any help from parents. How much more do you think should I arrange for before thinking about this?
senasena wrote: With your current down payment and income the max mortgage you can qualify for is approx. $450K (roughly), which would put your monthly payments at over $2K, quite a bit higher than what you are comfortable with.
Do you have any rrsp that you can draw towards the purchase of your first home?
Your aim should be to have as big of a down payment as possible to avoid CMHC mortgage insurance, it’s money wasted you will never recover.
You can consider First Time Home Buyer Incentive plan but I would caution anyone before jumping into it, basically you are giving up 5% of the ownership of your house, if the values goes up, or you do extensive renovations to the house causing the house value to go up, you will be sharing the gains with the government.
You have few options, small house with a basement rental, 2bdr condo and rent out one room, or small 1 bdr condo under $300K, you are the only person that knows what would be the best option for you. Watch out for condo fees.
I do not have any RRSP to draw from at the moment. I would love to avoid the CMHC insurance altogether but with 25k down, my budget is restricted to 250k only. At this pricepoint my options are kind of old condos with a really high condo fees. Unless I go over 300k, the options are really narrow for properties that are in a good enough shape for me to make a purchase. On realtor.ca, properties below 300k looks really beat down in general.

About my options, I am just wondering why a townhouse with 2 bedroom+ is not an option for me?


ilovetoyota wrote: Buy near the Conestoga college area of Kitchener. That area has the best tenants in Canada, the most precious of our country, international students.

If you have more money, buy near UW like Laurierwood area.

Don't go Cambridge, lack of exposure to foreign buyer, definitely a NO.
Upon looking up properties in waterloo, they are already quite franky out of my budget for anything decent. Also me working in Cambridge, I would love to be closer to work.
Deal Addict
Mar 27, 2004
4494 posts
2132 upvotes
Toronto
find a older home with a basement you can rent out. i helped a client from here buy a place in waterloo earlier this year for 455k for an older bungalow w bsmt apartment. he had people lined up to rent the basement from him. rent covering 80% of his mortgage.
Full-time Realtor
Newbie
Sep 12, 2019
1 posts
4 upvotes
Having bought three properties in Kitchener and coverted those into legal duplexes, here is what i would do in your situation.
1) Buy a single family home with the ability to add basement apartment. I look for 1000 sq ft bungalows with a seperate side entrance. You can get those for 400k to 425k right now. I would borrow the money needed to get the 20% you need for purchase or wait until you have the 20%.

2) Borrow money if possible (from family if possible) to add a basement aprtment doing it legally (i.e obtaining the required permits). Try to do some of the work yourself thus helping to keep your cost down.
Your all in construction cost could be as low as 40k to add a basement unit.

3) Once complete, refinance the mortgage at the new after repair value. Legal duplexes in kitchener in one storey 1000 sf ft bungalows can be appraised for 525k if not more.

4) Take the money from the refi and pay back the person you borrowed from. Both initial down payment and money for construction.

5) rent your property while living in the basement.. the upstairs 3 bed 1 bath unit could rent for as much 1700. You should then be able to afford the mortgage, taxes, insurance and utility cost of living there.

I understand this involves doing construction, hiring and trusting contractors, obtaining permits, borrowing from friends and family or obtaining private loans and becoming a landlord which could all seem daunting, but once done, this recipe can be repeated over and over to aquire properties and build a nice little portfolio. OR it at least gets you into the market at a cheaper price than simply buying a move in ready home.
Deal Addict
Apr 5, 2016
4461 posts
3045 upvotes
Calgary/Vancouver
i wouldn't write off CMHC. Sure you have to pay default insurance but in the long run, the appreciation of the property will most likely be greater than the around 3% premium you pay. Plus, the premium can be amortized into the mortgage so bonus, you don't have to pay it up front.

The first time home buyer incentive program is a scam IMO and it also really limits your purchase power. Based on your $80k income, you can only get financing plus the incentive amount up to $320,000. Add your $25k down payment and your absolute purchase price has to be below $325k. Based on $80k gross income, no debts and $25k down payment, you can go up to $500k purchase. $500k might be able to get you a home with basement suite that you can rent out for extra income.
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Member
May 18, 2015
484 posts
680 upvotes
Thornhill, ON
oasis100 wrote: find a older home with a basement you can rent out. i helped a client from here buy a place in waterloo earlier this year for 455k for an older bungalow w bsmt apartment. he had people lined up to rent the basement from him. rent covering 80% of his mortgage.
Impressive. Can you share a link to a similar property?

Just curious to see an example. Thanks in advance.
Deal Addict
Mar 27, 2004
4494 posts
2132 upvotes
Toronto
jonkoktosen wrote: Impressive. Can you share a link to a similar property?

Just curious to see an example. Thanks in advance.
Sometimes its just timing and being lucky. House was on sale only 1 day before we put an offer . Theres nothing like that for sale right now. The home is in the Beechwood area.
Full-time Realtor
Member
May 18, 2015
484 posts
680 upvotes
Thornhill, ON
oasis100 wrote: Sometimes its just timing and being lucky. House was on sale only 1 day before we put an offer . Theres nothing like that for sale right now. The home is in the Beechwood area.
Your client got a great deal, congrats. Too bad there aren't more properties like this available. Thanks for the info!

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