Montreal couple with $425,000 income buys townhouse with a 28% down payment | Canada Voices

Adam, an associate portfolio manager based in Montreal, is a very high earner.

That income allowed him and his fiancée, who works in communications and marketing, to buy a three-bedroom townhouse just outside the city for $710,000. They took possession a year ago.

The couple’s combined household income reached about $425,000 last year, with Adam earning roughly $350,000 of it.

Adam, 27, saved aggressively for six years, putting away about 45 per cent of his after-tax income. After maximizing his tax-free savings account (TFSA) and first home savings account (FHSA), he directed savings earmarked for a home into non-registered investments, such as Government of Canada bonds.

“At the time, my registered accounts were full, and I didn’t want that money to just lay around,” he said.

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Since the home purchase was a near-term goal, Adam prioritized lower-risk investments over growth. Worried about market swings, he wanted to be sure the funds would be available when they needed that deposit.

When the time came, the couple was able to put down $200,000, roughly 28 per cent of the purchase price. Adam covered half of the down payment himself, drawing on a mix of savings: 66 per cent from non-registered accounts, 24 per cent from his first home savings account and 10 per cent from his tax-free savings account.

The remaining half of the down payment came as a gift from his fiancée’s family, primarily from her grandfather, with additional support from her father. Adam said the family help, along with his earning power, market conditions and timing, made it easier for them to buy.

Even so, Adam was careful not to overextend. Although the couple was preapproved for up to $1.1-million, that figure never felt realistic. “We didn’t feel too comfortable taking on this huge amount of responsibilities early on in our life,” he said.

Instead, Adam spent six months building a detailed spreadsheet to determine what level of housing costs would still allow them to live the life they wanted.

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The spreadsheet itemized utilities, property taxes, insurance, maintenance, an emergency fund and even possibilities such as buying a second car.

“Name everything, it’s on that list,” Adam said. “A house comes with a lot of emotions and it was just one way to rationalize everything and put everything on paper.”

The model also tested what would happen to their lifestyle after buying. Adam wanted to be sure homeownership wouldn’t crowd out travel, charitable donations or spending on family during the holidays. At the time, the couple had been renting a two-bedroom condo downtown for about $2,900 a month.

They settled on a townhouse, about 1,400 square feet with three bedrooms and a private double garage. They expect to stay for at least five years.

When it came time to choose a mortgage, Adam leaned on professional and personal expertise. He spoke with colleagues in finance, family members working in banking, two lenders and a mortgage broker before deciding.

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The couple chose a 25-year amortization, and a five-year variable mortgage priced one percentage point below the bank’s prime rate. Their monthly payment are coming at around $2,600.

When choosing a mortgage, Adam said they were looking for flexibility. Because they view the townhouse as a stepping-stone home, Adam prioritized a mortgage that could be transferred to a new home and would carry lower penalties if they sold before the term ended.

At the time they locked in the mortgage, banks were forecasting interest-rate cuts, and Adam felt they had enough financial cushion to manage potential fluctuations. “Thus far, it’s been the right pick,” he said.

Since moving in, the couple has spent about $8,000 on renovations, mostly painting, along with cosmetic upgrades such as lighting fixtures and a bathroom vanity. They’ve also spent around $35,000 furnishing the home. Adam admits the first few months of ownership felt more like managing a to-do list than enjoying a milestone, but that has since changed.

“We’ve invited friends for dinners, and we also purchased a dog. Once you put life into it, it’s much more fun.”

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’s advice: A home purchase comes with more uncertainty and stress than any spreadsheet can capture. Buy for the right reasons, with the right partner and remember buying a house is a marathon, not a race.”