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In the competitive housing market surrounding Montreal, a young couple has successfully secured their first home, navigating the complexities of finance and personal aspirations. Adam, an associate portfolio manager, and his fiancée, who works in communications and marketing, purchased a three-bedroom townhouse for $710,000, aided by a well-structured savings strategy and support from family.
Strategic Savings and Investment
Adam, at just 27 years old, has built a commendable income stream, earning approximately £350,000 of their combined household income of around £425,000 last year. Over six years, he diligently saved around 45 per cent of his after-tax income, leveraging various investment vehicles. After reaching the limits of his tax-free savings account (TFSA) and first home savings account (FHSA), he redirected his savings into non-registered investments, including Government of Canada bonds. “I wanted my funds to remain active rather than sitting idle,” he explained.
With the couple’s home purchase as a priority, Adam focused on lower-risk investments to ensure liquidity when it came time to secure a deposit. Their strategy paid off, as they were able to contribute $200,000—approximately 28 per cent of the purchase price—towards the down payment.
Financing the Dream Home
The down payment was split between Adam’s savings and a generous gift from his fiancée’s family, particularly her grandfather and father. Despite being preapproved for a mortgage of up to $1.1 million, Adam remained cautious, preferring to avoid excessive financial strain at this early stage in their lives. “We didn’t feel comfortable taking on such a significant responsibility,” he stated, emphasising the importance of financial prudence.
To aid in their decision-making, Adam meticulously created a spreadsheet that detailed every aspect of home ownership costs, including utilities, property taxes, insurance, and maintenance. This comprehensive financial model helped ensure that homeownership would not impede their lifestyle choices, such as travel or holiday spending.
Making the Right Mortgage Choice
After settling on a 1,400-square-foot townhouse complete with three bedrooms and a double garage, Adam sought advice from various sources to select the most suitable mortgage. He consulted colleagues in finance, family members in banking, and two lenders along with a mortgage broker before opting for a 25-year amortization plan and a five-year variable rate mortgage, set one percentage point below the bank’s prime rate. Their monthly mortgage payments hover around £2,600.
Flexibility was key in their mortgage choice, as they view this townhouse as a transitional home. Adam prioritised a mortgage that could be transferred easily should they decide to move again, while also minimising penalties for early repayment. “With banks forecasting interest rate cuts at the time, we felt secure enough to handle potential fluctuations,” he remarked.
Transforming the New Space
Since moving in, the couple has invested approximately £8,000 in renovations, including fresh paint and upgraded fixtures, alongside around £35,000 in furnishings. Initially, Adam found the early months of homeownership more about managing tasks than enjoying the experience. However, as they settled in, they began hosting friends and even welcomed a new dog into their home. “Once you inject life into it, everything becomes much more enjoyable,” he shared.
Breakdown of Costs
– Purchase price: £710,000
– Down payment: £200,000 (28%)
– Closing costs:
– Home inspection: £850
– Legal fees (notary): £2,500
– Moving truck: £2,000
– Land transfer tax: approximately £14,500
– Renovations: £8,000
– Furniture: £30,000 – £35,000
– Monthly costs:
– Mortgage: approximately £2,600
– Home insurance: £200
– Utilities: approximately £260
Adam advises prospective buyers to approach homeownership with awareness of the uncertainties and stresses involved. “Buy for the right reasons, choose the right partner, and remember that purchasing a home is a marathon, not a sprint.”
Why it Matters
This couple’s story exemplifies the careful planning and financial acumen necessary for first-time homebuyers in today’s challenging market. As many young professionals grapple with rising property prices and economic uncertainty, their journey highlights the significance of strategic savings, prudent spending, and the invaluable support of family in achieving home ownership. For others in similar situations, it serves as a reminder of the importance of thorough financial planning and maintaining a balanced lifestyle while navigating the home-buying process.
