Real Estate

Young Couple - How much should we borrow

  • Last Updated:
  • Nov 30th, 2018 12:22 pm
[OP]
Member
Sep 13, 2007
374 posts
89 upvotes
Toronto

Young Couple - How much should we borrow

As a percentage of the maximum mortgage , how much should a young couple be borrowing for a freehold?

Assuming based on the standard mortgage terms (5 year fixed, 25 year amortization term), it seems like we need around 75% of the maximum mortgage amount to get into the lower end of the market.

Monthly Net Income (before bonuses): $7200
Estimated Mortgage Payment: $2300
No debts

I won't have any savings left right now but still got about another $150k in (RRSPs, company stock options and TFSAs) plus a pension.

In this situation, is 75% of the max amount ok, or should I lower the amount and try living elsewhere?

Thanks,
43 replies
Member
May 18, 2015
484 posts
679 upvotes
Thornhill, ON
Zero.

You'll renew at a higher rate in 5 years and your house will be worth less than you paid for it... You'll likely be underwater, trapped and ruing the day you listened to anyone in this thread telling you to borrow anything greater than zero.

I would wait to see how the correction/crash pans out before even considering this question and continue saving in the mean time.
Banned
Nov 18, 2014
824 posts
769 upvotes
Toronto, ON
None. I would not buy with prices declining and continuing to decline.

Since you are also young, buying is financial suicide as it limits your career progression by locking you into a location. Job mobility and growing your salary is the most important thing when you’re young.

And by mobility I don’t mean the same city.
Banned
Nov 18, 2014
824 posts
769 upvotes
Toronto, ON
jonkoktosen wrote: Zero.

You'll renew at a higher rate in 5 years and your house will be worth less than you paid for it... You'll likely be underwater, trapped and ruing the day you listened to anyone in this thread telling you to borrow anything greater than zero.

I would wait to see how the correction/crash pans out before even considering this question and continue saving in the mean time.
Exactly. We’re just at the start of the rate hike cycle and it’s dropped 30% since 2017.

A repeat of that in the next few years isn’t an impossible outcome
[OP]
Member
Sep 13, 2007
374 posts
89 upvotes
Toronto
Guys we definitely do need to buy and looking at the place with a 5-10 year horizon minimal. So we looking long term....this isn't a troll thread thanks
Deal Addict
Nov 2, 2014
1048 posts
395 upvotes
Scarborough, ON
Max out.

75% at the minimum.

Wish I did the same when I bought in 2014 (detached cookie cutter, but I could have gone crazy and it would have worked out).

Not trolling.

Thank me in 10 years.
[OP]
Member
Sep 13, 2007
374 posts
89 upvotes
Toronto
RobertSmalls008 wrote: Max out.

75% at the minimum.

Wish I did the same when I bought in 2014 (detached cookie cutter, but I could have gone crazy and it would have worked out).

Not trolling.

Thank me in 10 years.
In a rising interest rate environment where price increases are likely to moderate or increasing chances of a recession in 2018, would you still act the same way?
Deal Addict
Nov 2, 2014
1048 posts
395 upvotes
Scarborough, ON
noobienoob wrote: In a rising interest rate environment where price increases are likely to moderate or increasing chances of a recession in 2018, would you still act the same way?
If you are buying to live with your spouse for 6 plus years, hell yes.

If you are looking to invest and flip in 2-4, I would think different and not be as bullish (but I would not be scurred).

You are referring to a detached in the GTA I assume?
Sr. Member
Jun 7, 2017
847 posts
593 upvotes
BC
At these low rates, max out. Buy a nice home in a nice area at a price you can afford and enjoy your life.
Deal Addict
Dec 23, 2010
1737 posts
855 upvotes
Moon
I maxed out to buy what I can afford here in Ottawa (paid 430k all in). Same house is up by 40k in 1 year despite very aggressive rate hikes during the year. If I didn't buy when I did I would be priced out by the double whammy of real estate appreciation and rate hikes + mortgage rules. No regrets.
Banned
Nov 18, 2014
824 posts
769 upvotes
Toronto, ON
Applesmack wrote: I maxed out to buy what I can afford here in Ottawa (paid 430k all in). Same house is up by 40k in 1 year despite very aggressive rate hikes during the year. If I didn't buy when I did I would be priced out by the double whammy of real estate appreciation and rate hikes + mortgage rules. No regrets.
You are in Ottawa where the prices are not out of whack. Would you buy in Toronto in 2017? Today?
Deal Addict
Nov 2, 2014
1048 posts
395 upvotes
Scarborough, ON
rkanwar109 wrote: You are in Ottawa where the prices are not out of whack. Would you buy in Toronto in 2017? Today?
RK,

In 10 years, not including inflation, do you feel RE will deprecate in the main GTA (close to the core)?
[OP]
Member
Sep 13, 2007
374 posts
89 upvotes
Toronto
RobertSmalls008 wrote: RK,

In 10 years, not including inflation, do you feel RE will deprecate in the main GTA (close to the core)?
Guys, STOP ARGUING WITH THE BEARS

this is about, do you take out the max mortgage amount in GTA or not

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