House poor canada reddit. Edit: so it's actually even worse. People make bad decisions about homes. -3. Your pension from being a teacher is unlikely to be anywhere near enough to support your lifestyle when you eventually retire, so start putting away Don’t give up, you have options. 2M subscribers in the PersonalFinanceCanada community. Buy a primary residence if you want that responsibility and only secondarily think of it as an investment because it will not functionally serve as anything more than a sunk cost until you sell. Which isn't actually house poor. If you buy your house brand new today and your mortgage is for 25 years, by the end of your mortgage you’re looking at. 8%: $1380 Property tax: $480 Utilities (water, heating, electricity): $200 House insurance: $100 Internet: $80 For me to afford the same house on a $500,000 loan today, means I would have to save a hefty $400,000 down payment just to buy the same house. , by looking for a new job that is somewhat of a promotion). As an aside, we have lived in 2 homes over the past 26 years. To buy a house in Canada, you need at least $900,000 unless you want to live in a shitty province with nothing going on. I expect salary to increase to 150k within the next 2 years, but am I going to be house poor until then? Still have to think about closing costs and buying furniture A collection of 3 stories from the NYT, this one in particular stands out -. A house next to my brother went a similar way. Mortlach78. Do a budget projection with your anticipated expenses at various price points. Last thing you want is to be jobless and default on your mortgage. 8. mortage payments are basically the same thing as savings, and most people struggle immensely with saving money - a big fat mortage inherently forces them to curtail their consumerist spending due to the immenient and direct threat of losing your home, which results in effectively 40% of their income going towards Our second (about 1. . Award. Loved it. I would do it. It depends on your other expenses and salary. Lead paint, asbestos, old wiring, old heating, and old plumbing are things that really change how much labor is involved in a house. Hookers aren't cheap. •. 807,000 international students have been allowed to work unlimited hours. The total monthly payment for the house based on rates right now would be $3600. The rates will be higher in this case. Don't go house poor people. buying the most expensive house yields the highest amount of interest paid, but offers a higher Housing. Property taxes are $4k per year I am the only income earner at $50k per year. 4K subscribers in the canadapoliticshumour community. I'm saving $500-1000 per month, with my own mortgage, no family safety net, making 66k before taxes. true. But you can’t go into it without 6 months mortgage payments in the bank after close. In the 70’s education was “nice to have” but it didn’t rule you out of a middle-class life. False. 45%) versus 5 year fixed at just over 2% but HELOC has advantage of interest only payment and generally more flexibility with how to use it. A condo is anywhere from 40-80k, townhouses 100-120k and detached 120-250k depending on size and condition. If you are fixed, you are paying around 3. Only 8 European countries have lower home ownership rates than Canada. Like a good guideline is 25%-30% of your gross income, but I do exceed this myself because Canada is expensive. My cars will be paid off in a few months so I highly doubt she will ever be house poor, or poor in any way, with so many opportunities to fall back on others in the future. And please take into account that 30min-1hour driving twice a day will cost you about $250/month on gas AT LEAST. Projected 2026 household income = $275k-325k. A couple making 145k gross in BC could take home over 15k more NET than a couple making the same in QC. I now house poor (paying 77. Updates and news about Canada's housing crisis. And literally everyone in their baby boom generation expected to own a house to raise a family. This sub is for civil discussion of the topic. The scariest part is that while the Liberals have done horribly on housing, there's no one better to take their place. If you don’t have a need to buy a house, don’t buy one. 55 to rebuild our emergency fund/maintenance for home. The safety issues downtown are 90% just hysteria being driven by people driving in from St. Three in 10 (31%) Ontarians who own a home say they are house poor, meaning they don’t have much left over after paying bills related to their home. It was lots of equity that’s locked in hence house rich cash poor. Being just above zero cash flow after all of the bills are paid (which is most people probably). 3 percent. If you were going to save, you'd max out your TFSAs first. 8%: $1380 Property tax: $480 Utilities (water, heating, electricity): $200 House insurance: $100 Internet: $80 In my experience, the market always goes up eventually, and the interest rates always fluctuate. According to Creditnews Research, 30. People can be house poor while renting too, and factoring in your principle payments to your savings isn't a bad idea as the house is a long term retirement investment. It depends on where you live and what the house prices are doing, so look at house prices on a real estate site to get an idea. Mar 15, 2024 · The 32% Rule. Hell, not all bloody shake ups are revolutions either, with how many recent dead from the endemic, the supply of labour for the owner/investor class to exploit dropped even just a few percentage of the over population, about 30+K dead in Canada, 1+M dead in USA and now unions are getting A lot of investors bought houses sight unseen with the assumption they could resell in a few months and make 5-10% gains. Another option I have is get TN Visa and plan to move to US. 55. I owe $232k on it with monthly payment of $1050 at 2. For example if you have young kids and houshold income for 60K then even 3-4x can be hard. The minimum down payment on a house to get a mortgage is about 6,5% (5% plus 'costs'). Becoming a landlord, you will need to be able to float that unit in the case you have no tenants, or your existing tenants decide not to pay. 5 (baking in the risk appetite from banks, etc). If you are (for example) prime minus 0. There is a saying "old house, old problems". 2M-1. Canadian House Prices compared to the US are ToTaLLy WoRTh It. The corresponding variable rate would be around 4. Reply. We have SEMI UNIVERSAL HEALTH CARE and live in a racism free, crime free, utopia unlike the mass shooting filled apartheid state to the south. you've little excess income. They just have shit credit and couldn't scrounge up 5% to save their lives. Insurance: 220. We have friends who spent a solid $1M on a junky house a third of the size, in Toronto, couldn't live in it for a whole year because it needed another $200k in renos. The downtown area is having issues with homeless/addiction, but overall, it is good. It's astounding the opposition can't muster anyone to take him on. Car payment for a 45k car: 580. Looking at a 800 to 950k mortgage at just below 6%. Your real estate agent sees you as a paycheque and not as a client. Yeah but they have like a house. You need to realize and accept that your past self already sold parts of your future self. 5k/mo take-home. In Kochi,India I can buy a detached house which is 4x bigger for 70 lakhs INR(120k CAD). There are 0 detached houses in that price range in all of the lowermainland, Toronto, Montreal, or calgary(the 4 largest metro areas in canada accounting for 1/3 of all canadians). He isn't poor, he just give a shit about money. Buy a house if you want to own a house and will live there for 5+ years, but do not buy a house to save money. 875 percent interest. ) would be buying a house straight out of school or by age 25. To me that was house poor. If you cannot do this, sell the house, pay off your debt, have an emergency fund, and rent/buy for ~1500-2k a month. And with current high house prices I'm sure many people are hoping for the best just to get in the market. My investment strategies are best described as "negative risk" - I chose to invest in the safety and comfort of housing, over renting with a cash safety net. Based on my budget spreadsheets I feel like we would be fine, but I would love to know what the Reddit hive mind thinks. 45 Leftover:$1705. Your housing monthly payment is 37% of the take home--not sure that's house poor territory. It’d be worth it IMO to get what you want where you’ll be stretching for a bit and then end up living in the house you want to be in for years and years. Welcome to Canada’s official subreddit! This is the place to engage on all things… The maintenance expense will generally be the same. The lower, the better. If you're single and making 200K then even 6-7x wouldn't be difficult (although banks won't lend you that much) 556 votes, 155 comments. You can deal with a couple of house poor years. Me == $200k min, $235k max. So the percentage of house value in general isn't a great barometer in any highly inflated market. Contribute only 5% to 401K for 1st year, increase with raise. Other debts = ~5k credit card, $525/mo car payment. I think Trudeau will go down as a pretty poor PM. So I don't feel trapped, but given my current budget I'm barely saving $100 a month. My salary will double, I can save aggressively and buy in US/Canada or India. Housing. Plan to focus first 6-12 months to use $1705. The original term actually makes sense because you have a lot of house but not enough cash. The best car one can 'afford', the best house, the best electronics, the best vacations, etc. Professional-Sell625. In the US, you can find cheaper housing in some nice states. 158 votes, 154 comments. Welcome to Canada’s official subreddit! This is the place to engage on all things Canada. Here's our projected budget: Mortgage on 30yr amortization 2. As for your current expenses, the first bill I'd add to your list is retirement savings. We'll have another 50k in cash left to deal with closing costs, unexpected repairs, remodelling, etc. However, it's less than 40% of my monthly take home. Married at 22. I saved 90k CAD and I'm 34. Today I avoided becoming house-poor. Unless you count collateralized debt funds as both. Sort by: With $130,000 income, you will bring home at most $82,000 ($6833/month) after taxes, 401k contribution, insurance etc. 4 = $3200 /12months = $267/month. Albert who have never seen a poor person before. So lets be generous and say you get the 48K a year job and after tax you clear 2700 a month. It sounds so stupid when you actually type it. For single family homes it should be at least 1%. Savings = $25k with the option to pull an additional $25k from a beneficiary IRA. That alone makes our poor job market, high cost of living, low salaries, bad infrastructure, long Mortgage agent here 39% GDS is the norm for people with credit score of 680+. Sault and Seneca college will get you all the way to a Group 1 IFR rating. House never needs to steal or borrow Wilson's money, he just likes to do it to test the bounds of their friendship. Everyone is spending so much money to stay alive but not living a fulfilling life. House hold income CAN support it, but what the opportunity cost seems high. Now i pwe 7k on a truck worth 5k. Houses are expensive and time-consuming. I’d have to dip into this partially for down payment. Three months into the pandemic, Stephanie DiSantis felt claustrophobic working from home in her 800-square-foot townhouse in the Queen Anne neighborhood of Seattle. ~~~~~-- Expert in a field related to housing and would like to do an AMA either anonymously or publicly? Just won an offer on a house for 725k. The great majority of people have health insurance through their jobs, ACA or through Medicaid/Medicare. I think I did a mortgage calc and over 25yrs the interest exp alone is roughly 800-900k. Buy it looks like you're allocating over 80% of your after net income to your house. My annual salary is 160k and wife 80k, both before taxes. No mainstream party actually wants to make any tough decisions. 41% 3 year fixed. House Poor - suggestions? I have lived in my home since 2001. For rates to go to 7 percent fixed, that’s an increase of about 3 percent. My dream house is a house that fit these criteria: 1) affordable 2) clean and does not require much renovation 3) that you can live comfortably 4)in the neighborhood of your choice. The real issues of immigrating to Canada are not economic, but cultural and social. The US spent on average 2000$ per person on welfare, while Canada spent 1900$. The material standard of living is not even comparable, Canada will be way superior. Another 25% goes to our healthcare premium. Monthly payment will be around 3300 and change. People without equity think they’re rich too these days. Our home ownership rate is comparable to France. 5%, Canada has a lower home ownership rate than 27 European countries. Wife == 0$ min, $120k max. Yes, we're in a HCOL area, about 35% of our take home pay goes to mortgage and taxes. 250k salary at 35% effective tax rate is 13. View community ranking In the Top 1% of largest communities on Reddit Are we going to be House Poor or am I paranoid? My wife (25F) and I (27M) are looking to purchase a new build in Calgary (possession projected in Summer 2024). Salary of $120k, $600k house 20% down 5% rate. Because most people that are "house poor" are at the early stage of the ownership and are not Equity Rich. Here’s some quick maths. You already committed yourselves to 55k in student loans, and childcare costs. Built a 3000sq ft house with 2 stall attached garage 4 years ago on 35 acres that is worth about $450k currently. Hello everyone, I am a low income earner and I am questioning my financial decisions. I think I borrowed 150k less than I couldve, and it's still tighter than I'd like. Salary of $300k, $1. Basically anyone who is full-time employed owns a house. This is a subreddit to post anything related to Canadian politics that is funny: political… Ever hear of quiet quitting? Well there are quiet revolutions too, not all revolutions are loud and bloody. The social, economic, cultural and environmental impacts of this cannot be understated. However, I feel I could easily stop my extra mortgage payments AND not contribute the 10% to my investments, and by doing so I'd have an extra $1000 every month. if you're saying you wouldn't feel it, that's by definition not house poor. Given the limited inventory, we jumped on a $1. I disagree with OP as well, I grew up in rural NB around the early 2000s and both my parents worked only minimum wage jobs but still had the money to take a mortgage out on a house, keep 2 vehicles registered and insured and keep their 2 kids and a cat well fed, I remember renting my first apartment back in 2017 $500 a month for a 2 bedroom with a balcony and all Two rules of thumb - 2% rule and 50% rule. With this understanding, look at the other option: Save the 30k you currently have. The Cost of Being House Poor. 5 hours out of Toronto) home cost $500k. The house would have to be in pretty crappy condition for a 1 million dollar home to cost 500k of maintenance over 25 years Do not become house poor. HELOC is more expensive money (3. If you’re worried about being house poor and are already being frugal the best thing you can do for yourself is look to increase your income wherever possible (ie. Why would anyone rent out somewhere when they are losing money. When the home was purchased the first time, I was married and we had two incomes. Canada has begun a reckless immigration strategy, bringing in nearly 1. One could define house poor as anything above that. 80 votes, 21 comments. 174K subscribers in the canadahousing community. • 20 hr. She'll be fine even if she's living paycheck-to-paycheck. 800k loan on 3. List at 440 (already 100k overpriced, but whatever), sold for 640k by out of town buyers. But you should be saving for the septic system. I have a further 200k in TFSA/GIC, mostly held in low risk investments. 5m house, 20% down, 5% rate = $14916 ,mortgage $6979 pm. The 50% rule says that, over time, roughly 50% of gross rent will go to expenses - insurance, maintenance, vacancy, etc Unfortunately, before I was a reddit guy and wised up about my horrible financial situation, i got a 24% interest loan for 9 grand for a truck with 191k miles. Houses built late 80's on are usually okay. My math says you don't have any serious equity in the house and all your cash flow is going towards the house. You should aim for 30% or less of your income. RodgerWolf311. We are both goverment employees, so it's unlikely for us to lose our job (s). 2 million new immigrants a year. But ultimately it's personal finance for a reason, and external factors may come into play. So, like millions of other Americans, she started looking for a bigger space. There's no reason you have to put money into an RRSP. All told, approximately two million homeowners in Ontario are susceptible to financial disruptions such as an interest rate increase or change to their job situation. Also income tax. Claim 1: Canada has a higher home ownership rate than Europe, where most people rent. In my case my mortgage and taxes on my SFH is 1300. New windows- currently costs around 25k New roof- 15-20k Your lawn is gonna be completely dead, usually have to put down new dirt and resod New furnace- 10k. Are we shopping for a house that is too expensive? Will we be house poor? Am I just freaking out cause we are first time home buyers?! Please But whatever it is, most people will make it good economically in Canada after 5-7 years and will leave most Pakistanis back home in the dust by 10-15 year mark. A lenders can make exception but generally peak at around 44%GDS. That shit blows my mind. 8% of American homeowners are “house poor”—meaning they spend at least 30% of their monthly income on housing expenses like mortgage payments, utilities, and property tax. Say a home would be 275k. There is also some interest/upside that comes out of the $8,000 invested. as far as which is better, i'll look at it from a standpoint of improving your net worth. being "house poor" is objectively the correct decision for like 95% of people. Definitely anyone with a secure professional job (teacher, nurse, police officer, etc. I had a really shitty realtor who didn't understand my needs at all. We're planning on putting 250k down, which leaves us with a monthly PITI of around 4300/month. So if you time it just right, you can refinance at a lower rate which will drop your monthly payments. The good news is that you can make being house poor work if you're willing to make the sacrifices necessary. Use any additional income from my wife to increase savings and emergency fund. 365K subscribers in the CanadianInvestor community. Our first home we purchased for $155k in 1995 and sold in 2012 for $425k. at 40% marginal tax rate, $8000 *. ,, = $7635 pm take home, mortgage $2792. I can't imagine if I took the extra money. 5, you are paying around 2. We were separated (and then divorced) in 2011; in 2012 I refinanced the house in my name, pulling some money out of equity to pay out his share of the divorce settlement. As you can see, you are left with around $8k per month in scenario 2 vs just under $5k per month in scenario 1. 5% is still $3600/mo. We want common sense housing laws that ensure: transparency and ample housing stock, to make Canada's housing the most affordable in the G7. 2mil home last week that meets all of our needs and are I am currently 31 married with 3 kids. Otherwise don’t do it. Or pay up your ass $1500-2000 in rent money. Car's fully paid already. How to avoid the trap of becoming 'house poor'. At 66. And again this is all before considering pmi, insurance and taxes which clearly increase your costs by a not insubstantial amount ($740/mo or about $9k/yr). Don't plan on that $1600 a month rent from the basement suite as 100% certain in your budget. There’s so much to replace as a home owner. If this is a permanent situation of feeling house-poor, it doesn't seem worth it. We have 10k emergency savings and child care benefits of $270 per month that we can use for RESP. Plus, as you build equity the house will increase with value, and you can take advantage of opportunities to upgrade. Assuming a contribution on January 1st and 5% interest, it is another $34/month ($409 in total). Our annual income is around 125 000. As of today, you had a 0. You'd be trading one house-poor situation for being double-house poor. TOTAL MONTHLY EXPENSES: $3594. Buying a house in GTA or Ontario seems like the last thing I should do. I'm renting my current place for about $2600/month (including all utilities and internet). I’ve been approved for a mortgage range of 1. Ideally all of your debts Mortgage/Credit Cards/ Car payment should be below 36% of your gross income. A lot of people buy a house and end up house poor because they forget to factor in utilities, items for the house, maintenance of the house, and emergencies (like appliances, repairs etc) To be fair, the idea would be that you wouldn't even OWN a house if you couldn't afford it, but, you know. Sure, the media talks about how house prices have gone up 20%, but the real story is how the average buyer who makes $80k would need to save $300,000 more to buy the same home a year later. The maintenance expense will generally be the same. Montreal and Quebec City have lots of events which is nice but there is no unifying Canadian culture. He will be 1. You don't get house poor without having a house, and you don't have a house without at least some sort of money. The government pays for all of your flying, you pay for the tuition. . Smaller other expenses and higher salary means you can go to higher ratios without being house poor. 5M. 3 = $2400 /12months = $200/month. Being house-poor means that you spend a large portion of your income on your mortgage and other housing expenses, leaving little for other costs. At $40k, there won't be much value in an RRSP. But in their case it meant trading off from a house to a townhouse because work said “move” and there was no option to stay. 1. Would I own it now? No way, unless I kept on a handyman. They put 5% down and that was with help from parents. At over 200k miles. But when you have to give up non-optional expenses because your home costs too Reply. We bought 4 years ago, house payment 3500, net income 7000 a month. House poor, all the way. Without it, banks won't even look at you so that is absolutely where you would start. ago. Nous parlons en anglais et en français. House payment 3300, net income about 13k. , and another 70k in Roth IRA that we can pull out 55k without penalty (contributions). Did I mention We have HEALTH CARE. You're not house poor, you're poor. If now isn’t the time for that then keep that in your trajectory for the next couple of years. Depending on where you live, it can take over a year to get tenants out at this point. Made a financial mistake, house poor, would appreciate practical advice. Dont buy a home that is more than 2x your combined gross annual income and dont sign a mortgage that has you paying 60+% of your monthly take home income on housing costs. Now we refied. Edmonton is not that bad, and is overall safe. House price: 675k Looking at a 500k mortgage over 30 years at 6. I expect salary to increase to 150k within the next 2 years, but am I going to be house poor until then? Still have to think about closing costs and buying furniture Our second (about 1. Not ignoring Quebec. Your monthly car insurance is going to be maybe 150, your food will be 200, you will have 100 for cable and cell phone, 50 for electricity and water, 100 for property tax, 100 for gas per month, 300 a month for your public transit, 100 a month spending money, 200 a month for furniture, cloths, personal at 30% marginal tax rate, $8000 *. I was told by someone that I'm "house poor" and that I should rethink my budget. If you went to elementary school in Canada you were taught how Canada is a mosaic and not a melting pot, it sounds nice in theory but it just means that no one has anything in common and nothing represents all of Canada well. For starters, the property tax / maintenance / utilities on a 600k home varies SIGNIFICANTLY across the country. I grew up in a house built in the 30's. The percentage also likely goes down the higher the value of the home. 5% of earnings on mortgage and utilities), financially stressed and need advice on how to manage my situation. I'm also not a gambling man. He gets paid fuck all b/c of the liability he brings, and he isn't materialistic so he doesn't care. Tdlr: I bought condo townhouse due to fomo. The term is actually “house rich, cash poor” but has been bastardized in the past couple years. Share Add a Comment. People look at their bank accounts or credit card limits or pre-approved loan numbers and make decisions based on the funds available now (or in the near future) without understanding that every financial decision today impacts tomorrow. 40% of take home is a little on the high side; but with a low interest rate - you're probably paying down a fair chunk of principal every month; likely around 1K+. 2M subscribers in the canada community. On top of that you get taxed less, and will make more money in your career. Among all my other personalfinance mistakes, I think this avoidance of one was worth celebrating. Eg, you could probably comfortably pay an extra $1000-1500 in Edmonton is not that bad of a city. Simple. Ratehub gave me the purchase price of $467k, but that's assuming I buy a detached house. The mortgage + tax + insurance is consuming roughly $4k, which is roughly 40% of my take-home. Oil change and maintenance: allocate 100 a month. So yes, being house poor is much better than living cheque to cheque. The first is really for multiple occupancy buildings, but it is saying that the monthly gross rent should be 2% of purchase price. There are 3 aviation colleges in Ontario that are subsidized by the government: Sault College, Seneca, and Confederation. Canada Mortgage and Housing Corporation recommends spending no more than 32 per cent of your pre-tax income on housing expenses. The house would have to be in pretty crappy condition for a 1 million dollar home to cost 500k of maintenance over 25 years 5. A household of 4 cannot live comfortably with $6833 - $5000 = $1833/month. Edit2: I had to separate the charges by line bc a lot of people think I’m paying 300 oil change per month or 580 insurance lol. I felt very pressured into buying a home that was roughly 33% over my maximum. I think if you borrow what the bank let's you it's not too hard to become house poor. 1 in 3 American homeowners are ‘house poor,’ according to a recent study. the thing with being house poor is that you're poor. Please be respectful of each other when posting, and note that users new to the subreddit might experience posting limitations until they become more active and longer members of the community. We want common sense housing laws that ensure… 13 votes, 25 comments. Debt. 00026% chance of dying of COVID 19 in the USA, considering their deaths per million. We (30F, 35M)are considering purchasing a house for around 400 000. Nobody moved in, and it was relisted for 690k shortly after. When house poor, you don't get both. Be poor with your safety net in tact, and some savings (10-20% net) in the budget post purchase. My renters would be much better off buying my house from me in terms of monthly expense. Claim 2: Canada’s housing crisis is due to a lack of House price: 675k Looking at a 500k mortgage over 30 years at 6. 5yr when the house is done. Gas (premium): 300. Approved by RBC for mortgage, but feeling like I’d be “house poor”. Your other option is going to B-lenders who can do 55%. Maybe you folks can weigh in. By the time you are equity rich, you are prob also making more money anyway. Canadians interested in investing and looking at opportunities in the… What do you consider house poor? Is having $1300/month after every single bill (mortgage, car payments, food, utilities etc) and even after contributing to retirement, is this considered house poor? That $1300 I usually put in a savings account in case of emergencies or if we want to take a vacation. We are currently paying 2300 in rent + 190 in bills, 2500 total. Our mortgage payment will be 1850 + 360 taxes + 320 upkeep + 170 in bills, 2700 total. To me, house poor means your payment is so big you can't put aside an emergency fund, and what you make in income you have to immediately pay out. gm rr ts by fm jk di xz fp qo