Real Estate

700k house purchase !!

  • Last Updated:
  • Jun 6th, 2021 7:19 am
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[OP]
Newbie
May 27, 2021
29 posts
51 upvotes

700k house purchase !!

I feel like we just made a massive mistake and I need help to ease my nerves (or give me a hard reality check). We have 3 kids and just made an offer on house. We will know in a couple of hours if we got it or not but the odds are pretty high. The house is just perfect, very high quality items in the neighborhood we always wanted. I am scare financially though. We offered 700k. With the equity we will get from the sale of our current house our new mortgage will be $425k. We will have a 25k emergency fund remaining. We have 2 cars that we plan on keeping for another 4-5 years, only one of them has a monthly payment of $335 for another 2 years. We currently make $130k combine. Our income will gradually go up to reach about $170k in 2-3 years. Did we screw ourselves up financially ? I am having major panic attack. I need to know what to expect. My husband can get an evening job if necessary but it's obviously not the life we want in the long term. Or am I just overreacting right now ?
79 replies
Deal Addict
Jan 9, 2010
2341 posts
1814 upvotes
It's hard to say but based on your current income your mortgage is just going to be around 3.25x of your combined salary, which seems very manageable. The fact that your salaries will continue to rise based on what you stated is just going to make it easier 5 years down the road.

But honestly, there are so many other factors though. What are your spending habits? Do you have any other major expenses? How stable are your jobs and the likelihood of losing employment? How old is the house, are there going to be large short term expenses like replacing a roof or HVAC equipment that you would need to worry about?
Member
Dec 25, 2019
260 posts
307 upvotes
u will be fine 130k income and 425k mortgage is nothing. just make sure you dont spend to much on unnecessary trips , luxury items. also save for your kids future RESP etc... increase your emergency funding to $50k minimum ... people manage 700k mortgage 2 cars and 2 kids with same income in GTA ...
[OP]
Newbie
May 27, 2021
29 posts
51 upvotes
Thank you, our jobs are very secured. He work construction and I work for the government. If I was to loose my job for whatever imaginary reason I would have another one tomorrow probably paying higher. We don't spend much money other than 1k a month of daycare and 1k a month on food but we do go quite a bit for take-out so we will have to reduce that part. We are usually pretty frugal and buy used as much as possible. The house is 12 years old so not too old. The roof is good for another 5-7 years, the hot water tanked was just changed. The rest is very nice, wouldn't even need to paint so the cost should be pretty low. I am still wondering what we did here, I know nobody that bought a 700k house, that's probably because it's a dumb idea. Unfortunately we can't pull our offer out so I just want to get ready to what will happen to us financially if we win this bidding war.
Deal Fanatic
Feb 4, 2015
7004 posts
3242 upvotes
Canada, Eh!!
You're definitely not in one of the bigger cities [Toronto and area, Montreal, Vancouver, Ottawa, etc.] as prices for a good sized detached house are closer to 1M and higher.

Based on your income and spending it seems enough BUT make a budget in excel spreadsheet or even on paper and walk thru all revenues and expenses to see where you are at financially. Ensure have a rainy fund as well.

Stay calm, you are not over your head.
.......
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Newbie
Sep 6, 2013
65 posts
83 upvotes
Hamilton
You'll be fine, plenty people make much less annually and owe much more on their mortgages and do alright.
Deal Expert
User avatar
Nov 28, 2016
21074 posts
2885 upvotes
Out west
Easy401rider wrote: u will be fine 130k income and 425k mortgage is nothing. just make sure you dont spend to much on unnecessary trips , luxury items. also save for your kids future RESP etc... increase your emergency funding to $50k minimum ... people manage 700k mortgage 2 cars and 2 kids with same income in GTA ...
As well max it all out, and by the time you do that, you will have nothing left. basically you will have enough to do all this, but no fun

Unless you have some balance, most on this site dont.

Taxes be around 5K, utilities average $400 a month, etc, etc

Probably will be fine, but dont expect to max out your savings, resps, tfsa and money for retirement. I mean you can, but not much fun then
Member
Dec 25, 2019
260 posts
307 upvotes
WikkiWikki wrote: As well max it all out, and by the time you do that, you will have nothing left. basically you will have enough to do all this, but no fun

Unless you have some balance, most on this site dont.
u can still have fun , but yeah u wont go to Caribbean twice a year , go out for fine luxury dining everyweek with three kids , or expensive luxury cars jewelry etc ...well thats the price of owning your house and investing in your and your childs future(RESP)... U can still go to vacation (niagara falls , muskoka etc...) go out and eat in your local family restaurant and own second hand cars though...
Jr. Member
Feb 10, 2021
188 posts
124 upvotes
GTA
You'll be fine- always scary going through with a purchase and the #'s may seem high when looking at them from a totality standpoint..but your income (and proposed future income) should sustain the mortgage easily.

Unsure what the other extenuating expenses you may be carrying monthly as this is largely contingent on location (Property taxes, hydro etc.) but always remember to live within your means. I used to sell mortgages as a career and the advice I always gave to people is that when you're a home owner, your "luxury" should be considered that you're now a home owner. Thats something most cannot say so be proud of your sacrifices and continued sacrifices. Clothes and materialistic items outside of a home should come secondary.

Again, you will be fine- head up because the most exciting time of your life is ahead! Let us know when Congratulations are in order :) !
Sr. Member
User avatar
Jul 14, 2006
573 posts
348 upvotes
Toronto
homebuyer123 wrote: If I was to loose my job for whatever imaginary reason I would have another one tomorrow probably paying higher.
???
Go get a higher paying job now then
Sr. Member
Jun 18, 2020
994 posts
868 upvotes
Similar numbers when we first bought. Similar job scenario. We were fine, didn't live like paupers.

Maybe if you can, secure some line of credit for further Emerg.
Deal Fanatic
Jul 30, 2003
5883 posts
717 upvotes
Toronto
First of all - congrats. Hope you get it.

First one does knock the wind out of you. At 700k, no matter what it is you are good!
Only real thing you have to worry about is: Can you carry it in forseeable future? If carrying is not an issue - you are GOLD!

In couple of years, rinse and repeat and become financial independent :)
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Member
Feb 16, 2007
387 posts
153 upvotes
Ottawa
If you get the chance to get your dream home, and it doesn't break the bank (doesn't appear to in your case), get it. Good luck!
[OP]
Newbie
May 27, 2021
29 posts
51 upvotes
SBGoose wrote: ???
Go get a higher paying job now then
I would get more money but loose my full pension benefits and it wouldn't be as nice of a schedule. I would be working more probably. I am very happy where I am at and love the team I am working for. So in this case more money isn't worth it. Except if I am stuck financially.
Deal Guru
Feb 9, 2009
11545 posts
10037 upvotes
700k home only a dream in the GTA. People here are mortgaging 1 million dollars on 200k income.

With 130k (with potential to 170k) income and 425k mortgage it should be more than manageable.

Also you being in govt i assume a pension... so yeah you're likely overreacting.
[OP]
Newbie
May 27, 2021
29 posts
51 upvotes
GTA12345 wrote: Similar numbers when we first bought. Similar job scenario. We were fine, didn't live like paupers.

Maybe if you can, secure some line of credit for further Emerg.
Thank you, it's reassuring to know you were fine doing it. I do have a 25k emergency fund and a 40k line of credit that is available. That should be plenty. I am hoping we never have to use that line of credit though but it is available.
Newbie
May 30, 2021
4 posts
3 upvotes
You will be fine, just monitor your monthly spend carefully and cutoff/limit unnecessary spend. 5 years ago purchased our first home on a $345k mortgage and only $76k income..(i was the only 1 working as my wife was taking care of our newborn). Fast forward we both make combined income of more than $180k and the home has gone up $350k in value.
Last edited by emamabd on May 31st, 2021 1:07 pm, edited 1 time in total.
Deal Expert
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Jan 27, 2004
46724 posts
9828 upvotes
T.O. Lotto Captain
Easy401rider wrote: u can still have fun , but yeah u wont go to Caribbean twice a year , go out for fine luxury dining everyweek with three kids , or expensive luxury cars jewelry etc ...well thats the price of owning your house and investing in your and your childs future(RESP)... U can still go to vacation (niagara falls , muskoka etc...) go out and eat in your local family restaurant and own second hand cars though...
Thats exactly what i've been doing the whole time. Its not that bad . . .
Deal Addict
User avatar
Nov 30, 2005
1328 posts
744 upvotes
Ottawa, ON
UrbanPoet wrote: Thats exactly what i've been doing the whole time. Its not that bad . . .
Going on vacation with kids will likely be more stressful than relaxing. Nothing wrong or lesser about living within your means.

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