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Can someone give me advice and guidance on buying a condo?

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  • May 8th, 2015 5:23 pm
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[OP]
Banned
Apr 18, 2015
160 posts
13 upvotes
ON

Can someone give me advice and guidance on buying a condo?

I need some guidance as I want to buy a condo but not sure if I can afford it.. First thing is how much would I need as the minimum down payment or deposit or whatever it's called..?

I would only be able to pay the minimum amount which I think is 5% if i'm not mistaken? What would my mortgage payments be per month with such a low deposit?
I'm i'm not making lots of money should I even be buying a condo or just keep renting for now ?

The reason I want a condo is so that at least my rent is going into something, whereas when I'm renting from someone it's going nowhere.
13 replies
Deal Guru
Nov 21, 2011
10747 posts
3985 upvotes
There are countless mortgage calculators. Google is good for this.

5% of what? $200k? $300k? $500k?
Deal Addict
User avatar
Jul 10, 2010
1721 posts
568 upvotes
Near Toronto
You have to tell us the price of the condo if you want anyone to answer your question. If also have to take into account the maintenance fees for the condo.

There's nothing wrong with renting to save money and buy something when you can afford it.
Deal Addict
User avatar
Dec 16, 2007
3906 posts
1027 upvotes
Toronto
If you can only pay %5 down then you can't afford it imo, and based on your post you don't sound ready to be an owner anyway
Deal Addict
Dec 25, 2005
1447 posts
477 upvotes
The whole "at least my rent money is going somewhere" argument is a fallacy. Affordability aside, if you're making this argument what you need to do is compare the cost you'll pay for rent with the cost you'll pay for housing, excluding your mortgage principal. These costs can be significant. You'll want to include items like mortgage interest, CMHC fees, closing costs, property tax, utilities (water, electricity, gas - if not included in condo fees), condo fees, special assessments, and any required maintenance.

I think affordability is a very personal decision, and am not a fan of the "rules" that people come up with. But, you don't want to end up "house poor" with a 25 year commitment. If you'd like to post your salary and desired condo price, people can probably give you some subjective advice; otherwise, take a look at a mortgage payment calculator and add up all of the costs I mentioned above. If owning a condo is going to eat up all of your income you have to ask yourself if it's worth it. Remember, there are many costs that go along with home ownership that don't increase your net worth.
[OP]
Banned
Apr 18, 2015
160 posts
13 upvotes
ON
Nukey wrote: The whole "at least my rent money is going somewhere" argument is a fallacy. Affordability aside, if you're making this argument what you need to do is compare the cost you'll pay for rent with the cost you'll pay for housing, excluding your mortgage principal. These costs can be significant. You'll want to include items like mortgage interest, CMHC fees, closing costs, property tax, utilities (water, electricity, gas - if not included in condo fees), condo fees, special assessments, and any required maintenance.

I think affordability is a very personal decision, and am not a fan of the "rules" that people come up with. But, you don't want to end up "house poor" with a 25 year commitment. If you'd like to post your salary and desired condo price, people can probably give you some subjective advice; otherwise, take a look at a mortgage payment calculator and add up all of the costs I mentioned above. If owning a condo is going to eat up all of your income you have to ask yourself if it's worth it. Remember, there are many costs that go along with home ownership that don't increase your net worth.
Ok, thanks for the responses. Sure I'll input my salary and stuff. I don't make much, entry level at the moment so about $2k/month after taxes.
One thing I want to put out there, I'm not buying a condo as an investment to say, I'm more buying it so that I have something under me that is liquid. And it's been a dream of mine for a long time.

I'm looking to buy a cheaper condo, for maybe lets say $200,000-$250,000. The reason this got my interest is I have a friend who told me it's cheaper to own than rent and that I'm wasting my money, which is true. He pays about $900 for his condo a month. I pay around the same for rent that goes in the garbage every month.

What do you guys think?
Deal Addict
User avatar
Dec 16, 2007
3906 posts
1027 upvotes
Toronto
acg011 wrote: Ok, thanks for the responses. Sure I'll input my salary and stuff. I don't make much, entry level at the moment so about $2k/month after taxes.
One thing I want to put out there, I'm not buying a condo as an investment to say, I'm more buying it so that I have something under me that is liquid. And it's been a dream of mine for a long time.

I'm looking to buy a cheaper condo, for maybe lets say $200,000-$250,000. The reason this got my interest is I have a friend who told me it's cheaper to own than rent and that I'm wasting my money, which is true. He pays about $900 for his condo a month. I pay around the same for rent that goes in the garbage every month.

What do you guys think?
At your salary and minimal downpayment you won't get more than a $100k mortgage
Deal Addict
Dec 25, 2005
1447 posts
477 upvotes
acg011 wrote: Ok, thanks for the responses. Sure I'll input my salary and stuff. I don't make much, entry level at the moment so about $2k/month after taxes.
One thing I want to put out there, I'm not buying a condo as an investment to say, I'm more buying it so that I have something under me that is liquid. And it's been a dream of mine for a long time.

I'm looking to buy a cheaper condo, for maybe lets say $200,000-$250,000. The reason this got my interest is I have a friend who told me it's cheaper to own than rent and that I'm wasting my money, which is true. He pays about $900 for his condo a month. I pay around the same for rent that goes in the garbage every month.

What do you guys think?
I'm on my phone so can't really type anything detailed, but $900 / month is either his mortgage cost alone (excluding all of the other items I mentioned which can add up to just as much) or he had a very substantial down payment. A $200k 2.89% mortgage at 25 years is around $930 / month alone (and interest rates won't stay low forever).

I think you need to create a spreadsheet with all of the associated costs and cushion for unplanned events (e.g. special assessments). Doing so you'll see the ownership costs will be well in excess of $900 on a $200k property, with a low down payment.

With $2k take home pay a very significant proportion of your income would be going to housing.
Deal Addict
Oct 29, 2010
4395 posts
743 upvotes
To be approved for 5% downpayment, you need to have a very high income to cost ratio. And even then it's a gamble as you don't really know if they will accept you for mortgage until you apply for one.
You can only apply for one after you put an offer and it was accepted. That's the situation i had, i had to put my downpayment on the line without knowing if they will approve me for mortgage.
Luckily for me, they accepted our offer with finance condition, so we had a way out if they don't approve us, but the real estate market is so hot now that most sellers don't accept offers with conditions inside.

You will probably need double your income to be approved for 250k mortgage. If on the other hand you were able to get 10% downpayment, your chances of being approved are going to be much better, that's a mistake we didn't do/know before we put an offer, they look at you complexly different if you put 5% or 10% down, i had to get my parents to co-sign for them to approve it and me and my wife together make about 120k (500k mortgage though)
Deal Guru
Nov 21, 2011
10747 posts
3985 upvotes
You can't afford anything at that income
Newbie
Feb 20, 2015
64 posts
4 upvotes
Vancouver, BC
I have experience with this, argh!

Make sure you buy from a reputable builder because some condos are pretty poorly constructed, they seem to decline after Year 3. (I guess they got your $ after 3 years?)
Newbie
May 7, 2015
16 posts
7 upvotes
Ottawa, ON
At a gross annual income of say around $30-32k... you're TOTAL household expenses can't be much more than around $850 to even be considered for a mortgage with 5% down. So, lets say your condo fees are around $250 (which is really low), taxes around $200 and heating around $50.. that leaves you with a $550 mortgage. Its not going to happen. You need to increase either your down payment (significantly) or your income.
Newbie
May 7, 2015
16 posts
7 upvotes
Ottawa, ON
flafson wrote: To be approved for 5% downpayment, you need to have a very high income to cost ratio. And even then it's a gamble as you don't really know if they will accept you for mortgage until you apply for one.
You can only apply for one after you put an offer and it was accepted. That's the situation i had, i had to put my downpayment on the line without knowing if they will approve me for mortgage.
Luckily for me, they accepted our offer with finance condition, so we had a way out if they don't approve us, but the real estate market is so hot now that most sellers don't accept offers with conditions inside.

You will probably need double your income to be approved for 250k mortgage. If on the other hand you were able to get 10% downpayment, your chances of being approved are going to be much better, that's a mistake we didn't do/know before we put an offer, they look at you complexly different if you put 5% or 10% down, i had to get my parents to co-sign for them to approve it and me and my wife together make about 120k (500k mortgage though)
Get pre-approved to avoid the above situation... and depending where you live, there are plenty of condos on the market. ALWAYS include the finance clause in your offer especially in your case.

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