As it turns out, there were a lot more options than we had considered. I've recently run the mortgage numbers based on a $360K mortgage on a five year fixed - I wanted to show you that even though I post our best case scenarios sometimes, we are aware of how ever $10,000 will affect us.
Based on $360,000 Mortgage:
- With a 5 year fixed rate (4.34%) - Our monthly payments would be $1,771.44
- With a 5 year variable rate (2.25%) - Our monthly payments would be $1,374.16
We will be choosing a 5 year variable rate on a weekly basis to align with our pay schedule - so our payments would be $316.89/weekly which works out to be a bit less then the monthly payment (approx $106.60). To ensure that we can afford the 'worse case' scenario - I make sure we can always afford the payments based on a five year fixed rate.
Here are examples of our worst case/best case. I can't say for sure exactly where every dollar would go, but this shows that we can afford the house either way - we simply afford ourselves more flexibility if we keep the mortgage lower.
I always feel better about things after running the numbers, and I'm still confident in our ability to afford this mortgage, with the upgrades we want.
It's good to see it in black and white, isn't it? It will be tight, but doable.
ReplyDeleteOnce you believe in it. Go for it. You would know what you have to do to make it work.
ReplyDeleteWhat happens if either of you lose a job or you have a baby and go on maternity leave? Its definitely doable but I think that it would be too tight for my comfort level. However, I'm not the one buying the house. You need to do whats best for you.
ReplyDeleteWhat if by the gas prices going up, the groceries budget, utilities are going up?
ReplyDeleteAll the required bills including the mortgage should never be more than what the two of you can afford if both of you would be unemployed at the same time. Your budget should include a house and car maintenance fund too. Maintain your finances in such way, that in worst case scenario at least you won't have to worry about your finances.
In your previous post you calculated that in the last 8 months you spent about $577 for eating out.
ReplyDeleteAlthough I know that you are trying to reduce the amount, the fact is that you need to include that in your budget too so you are not surprised with the bills when you have a month like last March. Is it included?
Wow! Canadian variable rates are really low. Ours are at a historical low, but even floating rates are about 5%.
ReplyDeleteSeems like you guys are in the right track to get the kind of house that you want! Good idea on budgeting both the good/bad case scenarios to be prepared for either outcomes. Hope that you make the best decision based on what you can afford. I am in the process of shopping around for new car insurance and I am going to run a couple scenario comparisons to see what's best for my budget ;) enjoy your weekend! Vicky
ReplyDeleteI think you need to ask 'Am I going to get my money's worth out of each and every upgrade?'. I know how easy it is to get caught up in the upgrades however, if someone is looking at your house and your neighbours are they willing to pay $20,000 more for yours?
ReplyDeletegetting heart palpitations just looking at your numbers and how close to the edge they are...
ReplyDeleteThis is so exciting for you!!!! These numbers look AOK to me. One of my coworkers told me the best thing he's ever done for himself financially was buy his first property, and that it really grounded him.
ReplyDeleteHowever, I would agree that your budget doesn't leave a very high net margin. I'd feel more comfortable (personally) if your leftover amount was a couple of hundred as opposed to $17 or $21.
I love that you do worst case and best case scenarios. I should start doing that. I always just go middle of the line, and end up with the worst case. Damn expenses..
ReplyDelete