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[cranefly]

Thanks, all.
I always confuse net and gross. sorry for confusion. I guess I'm not in a hurry to buy, but it seems like that's what everyone does. I'm nearly 40 and still rent, but the rental situation here is crazy (almost 0% vacancy)--more expensive than just paying a mortgage each month. And what's worse is the tenant/landlord laws here are abysmal, which means I've moved every single year for the last ten years... the moving takes up months of time.

I'd rather live in a nice apartment than a house, but the local apartments cost more than the houses, and then there's condo fees on top of that, so I don't think it's worth it. There are new "townhouses" that are brand new/close to new that go for about $300K. I think that's my best bet, when I'm ready to buy.

I do feel like I'm throwing money away renting, but then mortgage interest is not a tax deduction in Canada, so it's cheaper in the short term to rent. Bah, it's all so confusing! Why didn't they cover this stuff in high school??

[clean]

I always confuse net and gross.

Fish may be gross, but you could only bring home what is in the NET.

[navelgazer]

Maybe it's just my state, but my mortgage costs are really, really reasonable. Much cheaper than renting. It's the property taxes that bring it way up. Of course, we factored that in, but on paper we look like we really undershot how much house we can afford. Finally, in part because of these high property tax rates this area is actually doing okay, home-value wise. So, we only bought a house because we could be reasonably sure that we would be able to sell it in the next 3 years (as sure as anywhere right now).

[concordancia]

"Gross" means big - it is the bigger number.

[anon99]

Last week the Canadian government announced changes to the mortgages in Canada.  I don't think zero down mortgages were ever common here, but they have done away with them altogether.  they also reduced the length of a mortgage, gone are the 35-40 mortgages and you have to qualify for a 5 year fixed interest rate mortgage even if you are getting a 3 year variable.  I don't know when they come into effect.

Save money for a big down payment.  Anything between 5-20% means you have to pay CMHC (Canadian mortgage and housing) insurance which is a percentage of the purchase price.  I bought a condo while I was a grad student for the same reasons you mentioned, the mortgage, condo fees and property taxes were all less than if I rented.

From the prices you are giving, I'm guessing you are in one of five cities.  Some of those have great transit systems.  Try looking at condos/houses in an area that may be further from where you work, but are still easy to commute to work. Property taxes and upkeep will also be less if you have a townhouse or condo.  The housing situtation in Canada is quite different than in the US.  Where I am (western Canada), houses are selling at similar prices to what they sold for before the market crashed.

[cranefly]

"Gross" means big - it is the bigger number.

I got it now. I was thinking, because I used to work in retail and we'd talk about "gross margin" that was profit... (i.e. "take home") hence the confusion.

So for those of you who are in similar situations--how many x Gross did you buy? Is 3 a reasonable number? I have been following the Cdn changes in mortgages, and the common number that gets thrown around is that in most big cities people are paying 5 or 6 times their gross. I feel that's too much--I'd rather live small and get out early!

[anon99]

I paid 3x gross when I bought my place.  I have no other debts and am single, so I think that makes a big difference.

[concordancia]

I paid 3x gross when I bought my place.  I have no other debts and am single, so I think that makes a big difference.

Yes, mine is almost exactly 2.5 and with student and car loans it is cutting it close to being house poor. I have given up multiple lattes and am eating at home more, but still go out with friends and save.

[pink_]

About 3x (maybe 10K less).

[clean]

When I bought my house, it was 1.5*Gross (before summer school).

I figured that I could rent it for the mortgage payment if the job didnt work out and I couldnt sell it.  On the other hand, less expensive houses are easier to sell than more expensive houses.  Finally, if I had to sell it for a loss, Id rather take a 10% loss on a 100K house than a 200K house!

[madhatter]

I bought at a very conservative 1.9x gross. When we had to leave town and sell the house at a loss, I recouped $700 from my investment and six years of home ownership. If we'd bought a bigger, fancier home, foreclosure/bankruptcy would have come sooner.

[navelgazer]

We bought 2.9 gross with 20% down and no other debt at all (no car loans, no student loans). Mortgage rate 5.15, currently paying 13 months a year mortgage (although that will go down to 12.5 months a year if we don't get raises next year).

[prof_tournesol]

Cranefly, you might want to read the daily Canadian real estate blog greaterfool.ca for a take on where the Canadian market is currently heading. Turner can be quite a Cassandra and sees the sky falling everywhere, but if you read him for a few weeks you will run across a ton of data. Make it part of your morning routine

I paid 2x gross for my house in 2005 with 33% down, and it will be paid off in three years. I'll be motivated to pay it off more quickly if/when interest rates rise this summer. Real estate agents and mortgage brokers will push you to take on as much debt as you can, but you really need to resist this lest you find yourself tying up all your money in an asset that isn't growing in value