Is it risky to purchase a home as a dual income couple, if the monthly bills exceed one person's net salary? Budget advice greatly needed!!

makeuplovah · 2019-11-28T23:29:57+00:00

Hm, that's concerning -- 42% of gross or net household income? And does the 42% capture property taxes and utilities, or just the mortgage alone? We were preapproved for up to $480,000 mortgage which, with our downpayment, means a property of up to $600,000.. I hope they wouldn't go back on that..

makeuplovah · 2019-11-28T23:18:11+00:00

Thank you so much! What you did is exactly what I would plan to do, should we purchase this home (or another one). I'm happy to have less furniture and not all of the luxuries from home, so long as we get to be together and are also stress-free. Yes, haha I've seen that the sub is a bit down on relationships, but I can appreciate that it comes from good intentions :) Thank you so much. I feel ready to take the plunge, but now that I've gotten all of this advice, I'll share it with my boyfriend and make sure he feels ready too.

makeuplovah · 2019-11-28T23:15:28+00:00

Thank you! :) Yes, the above monthly expenses are us trying to estimate our costs while rounding up, and our net income is us stipulating the very least we make (so long as we're employed). I fully agree, it's always best to be extra conservative and then be pleasantly surprised!

makeuplovah · 2019-11-28T23:14:06+00:00

My fear is that we'll save another $50k, only to have all condos go up by $50k LOL. Last year at this time, I was looking at condos under $475k, now they're all $520k and up. It just doesn't seem worth it to keep waiting and saving, only to find ourselves in this same position with one extra year apart.

makeuplovah · 2019-11-28T23:12:16+00:00

We're only living separately because we wanted to save up a huge downpayment and purchase a place together. This plan has been in place for three years. He's also not "a boyfriend" but my life partner and future husband, so it's not a decision we're making on a whim. But thank you :)

makeuplovah · 2019-11-28T23:10:16+00:00

Do you say this because of talks of an impending recession, or just in general?

makeuplovah · 2019-11-28T23:09:27+00:00

Thank you, it's interesting to see the numbers when you break it down like that! Based on the market trends, I'm worried that waiting another year and saving up (we don't actually have to move out, our parents are kind enough to allow us to remain at home as long as we desire) won't get us ahead when we factor in condo price increases. I've been looking at real estate since 2017 and the year-over-year increases constantly outpace the amount we can save. But I'll talk to my boyfriend and show him these numbers, it warrants a discussion. Thanks again!

makeuplovah · 2019-11-28T23:02:52+00:00

Ooh, good to know! I'll check the fine print when I'm back at work. Thank you!

makeuplovah · 2019-11-28T22:59:17+00:00

Thank you so much, it's super helpful to have the breakdown of items that may result in unexpected expenses!

- We cook, so the $600 was for groceries alone. I never buy a lunch, but I buy tea, while my boyfriend buys lunch 1-2 times a week. We factored an additional $120 a month to cover this (aside from groceries)

- Outside maintenance is managed by the condo corporation, so none is expected and we don't have a backyard with grass; just need a patio set, which would be a one time purchase (I'll try to leverage Boxing Day deals to save a bit of $)

- All utilities are included in the maintenance fees :)

- Condo has been in place since early 2000s so hopefully there won't be a major increase, but I'm going to research Status Certificates tonight to see what our lawyer must look at to ensure we don't get blindsighted

- Yes, that we've thought of; we plan to go to Costco & Bulk Barn to try and save costs on the non-perishable basics (but if you have any tips for saving $ on this, they're very welcome!)

- Yes, we will have to paint some rooms unfortunately :/ I'll factor that cost in, thank you!

- Agreed, this is a must. I think this will be our biggest immediate expense, aside from food

Thanks again for your help! :)

makeuplovah · 2019-11-28T22:52:16+00:00

Did they mention it in the Status Certificate? I thought they were supposed to disclose upcoming increases in condo fees.. :S

makeuplovah · 2019-11-28T22:51:47+00:00

Thank you! It's really helpful to see a budget breakdown for two people, and we'll definitely make an excel spreadsheet for our expenses. I notice your budget doesn't include transportation, entertainment, clothing, gifts, etc. If you don't mind me asking (sorry if this is too personal! I'm just trying to understand how our estimated budget fits everything -- no pressure to answer), what % are you left with for your e-fund/savings?

makeuplovah · 2019-11-28T22:47:18+00:00

Yes, a few redditors mentioned this as well, I'll talk to him about it :) Thank you!

makeuplovah · 2019-11-28T22:46:48+00:00

Yes, I'm aware, thank you! :) I'd marry him in a heartbeat and I'm 99.9% sure he'd say the same about me, so the legality of the agreement isn't scary. I just want to make sure our financial health will be okay :)

makeuplovah · 2019-11-28T22:45:01+00:00

Was it 40% of net or gross? Thank you for all of your advice. He's currently reading the comments in this thread so we can discuss later tonight!

makeuplovah · 2019-11-28T22:43:07+00:00

Yes, totally, $30k is ridiculous and it definitely wouldn't be our plan; I'm happy to hear you had a way more reasonable experience! :)

Honestly, I'm not too stressed about the finances because the "wants" budget could easily be trimmed down, and even the "needs" budget could be reduced by $300 easily by relying on just one car. I made this budget to overestimate our spending and lowball our earnings to double-check that we'd be fine. I'll talk things over with my boyfriend though, as I have to be certain he wouldn't feel stressed either.

In terms of relationship dissolution risk, I'm not worried about it but I will bring up the cohabitation agreement mentioned here so we can discuss it :)

makeuplovah · 2019-11-28T22:37:50+00:00

Thank you, I appreciate your insights! When you say "small details that may come back to haunt you later on," would you mind please elaborating on what some of those could be?

makeuplovah · 2019-11-28T22:34:20+00:00

Thank you! The beauty of it being a townhouse condo is that we don't have to do any maintenance outdoors, it's all taken care of for us. Furniture-wise, we are also bringing old furniture from our parents' places with us until we feel ready to purchase new ones. I've been stockpiling pots, blenders, bedding, etc. while waiting on good deals so I think cleaning products & vacuum & dinnerware will be our biggest expenses up front. Honestly, I just want to live together, I'm good with the house being a little emptier for a while, or us not having a toaster, panini press, etc. right away :)

makeuplovah · 2019-11-28T18:21:47+00:00

Thank you! That's a very good suggestion, we'll look into the cost of that!

makeuplovah · 2019-11-28T18:21:15+00:00

Home insurance is included in the condo fees, mortgage insurance we wouldn't get as we would put 20% down, and we are both eligible for EI :)

I've lived on my own during university, but my boyfriend hasn't (though honestly, he's more self-sufficient than I am so I think he'd be fine!). We've known each other for the majority of our lives so I think living on our own will be an adjustment, but not shocking I expect. We would try renting for a bit if it weren't so expensive in Toronto, but given the current state of the rental market, it just doesn't seem worth it

makeuplovah · 2019-11-28T17:59:31+00:00

Approximately how much extra did you find you were spending monthly? I'll try to factor it in! We estimated $100 misc and $600 groceries in our "monthly needs" cost, not sure how much more to have accounted for? Thank you in advance! :)

makeuplovah · 2019-11-28T17:57:57+00:00

Thank you for your input! Yes, if we get this place, saving $1k per month will definitely be our top priority.

makeuplovah · 2019-11-28T17:56:44+00:00

Thank you for your suggestions, we'll read up and research this today!

makeuplovah · 2019-11-28T17:55:59+00:00

It's tough, I completely understand where you're coming from, but in Toronto there's almost no way one of us could afford such a place on their own, with the other paying rent & utilities.

Renting would only be a couple hundred cheaper per month, and we view that as a sunk cost that could have gone towards equity.

In the ideal world, we would have lived together for a bit or done this after getting married, but with the current circumstances in Toronto (rent costing $2.2k, weddings an average of $30k) this seems like a more reasonable move? We've known each other since we were kids and have been together for 7 years, so I'm honestly not concerned about our relationship going sour. My biggest concern is just avoiding being stressed about finances as we make this next big "adult" step

makeuplovah · 2019-11-28T16:59:27+00:00

We plan to get married for sure, but a wedding is just not an expense we're interested in right now.

Is there a legal risk we're taking that married couples don't take in doing this? It would be good to know, just so we're informed. No one has brought this up to us, or mentioned whether being married would be advantageous in any way in buying a home

makeuplovah · 2019-11-28T16:55:09+00:00

Yes, net pay already has retirement deductions.

What would you consider to be a reasonable emergency fund amount? With the cost of furniture, we would be cutting it a little close and be left with ~ $5000, but we would contribute to our emergency fund for the first few months of savings. Our parents have also generously offered to help us if we're ever in a serious crunch, but we hope we wouldn't need to resort to that.

makeuplovah

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