Not To Be Trusted With Knives

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Happy 4th condo-versary to me!

Hey remember that time I bought a condo? Would you believe that was FOUR years ago? Where does the time go?

My mortgage broker sent me an (automated, I’m sure) “happy anniversary of having bought your condo” email, which is what reminded me that tomorrow is 4 years since I took possession of my humble abode. So I looked at my trusty mortgage countdown spreadsheet (because of course I have a spreadsheet) and according to my calculations, I have paid off 53% of my mortgage principal in 4 years. Not too bad, if I do say so myself. Of course, I ridiculously lucked out when I bought this place – the price was very good1, plus I have a few different source of income in addition to my day job, so I have had the luxury of being able to make lump sum payments. Also, I’ve had very little in the way of additional expenses, as my unit has been very well taken care of and the strata does an excellent job of maintaining the building.

Given that the Greater Vancouver real estate market continued to rise at an insane rate since I bought, I’m actually in the position where I own an even bigger proportion of the place than I would otherwise. When I bought the place, I made a 25% downpayment, meaning the bank technically owned 75% of my place. If the price of the place had stayed the same over the past four years, I would now own 65% of my place and the bank would own 35%. But since the value of the place has gone up, I now own 77% of the place if we use the most recent assessed value (which is what the province assessed my place as being worth as of July 1, 2017). If we use the average amount that units in my building that are identical to mine have sold for in the past few months2 (assuming that I could sell my place for that price), I currently own a whopping 82% of my place and the bank owns a mere 18%. It’s a weird situation – I like to remind myself that the “value” of my place is really all just theoretical given that I’m not planning to sell anytime soon. But it does give me the opportunity to do some fun math! #nerdery

Anyway, my next hurdle is that I’ll have to renegotiate my mortgage next year, as my mortgage was a 5 year term. The interest rates are higher now than they were 4 years ago, so I’ll have to pay a higher interest rate. Boo-urns. I guess I have a year to figure out how all that works.

  1. In the context of the time and place in which I bought it. It was an absolutely insane price if you compare it to just about anywhere else in the world. []
  2. Which is almost double what I paid. []

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I Bought A Condo!

mega monopoly has skyscrapers

Here’s a photo of my condo building – it’s the tall one, second from the front. All of the red buildings are wedding dress shops1.

A few weeks ago, my friend Kim came over for dinner. On her way in, she saw a realtor who was waiting for a client who had an appointment to look at  a condo that was up for sale in my building. She came in and said, “Your exact apartment is for sale on the 10th floor. Why aren’t you buying it??” And then she told me the price. And the price seemed too good. My first thought was “omg, what’s wrong with my building? Why is this apartment so cheap?” I should note here that “cheap” is relative. Housing prices in Greater Vancouver are insane and though New Westminster, where I live, is cheaper than Vancouver (or even Burnaby), this price seemed quite good, even for New West. So I went and looked at it and though it was a little weird looking at an apartment that has the exact same layout as mine, there were a few things that made it nicer – better appliances2 and laminate floors3, for example – so I wasn’t looking at an *exact* copy of my place – but pretty close! And then I called a realtor to have her look into the building for me and I talked to a friend of a friend who is on strata4 in the building and everything checked out. And I crunched some numbers and found that mortgage, strata fees, and property tax will be significantly less than my rent. And I realized that I really like my apartment, I like my building, I like New West. And I don’t have plans on going anywhere else. So I put in an offer. And after some negotiation and some due diligence5 ,6 I am now about to be the proud owner of my very own condo – closing on June 23, possession on June 24.

Ok, technically I am going to be the proud owner of 25% of a condo, with the mortgage company7 owning the other 75% of the place but allowing me to live there in exchange for me paying them off for the next 22.27 years8  ).

Monopoly

The mortgage company.

In related news, Watson & Crick are over the moon with all the cardboard boxes that I’ve been bringing home. Moving is a kitty paradise. Until the actual day of moving, when they’ll be trapped in a room as movers make a bunch of noise in the other rooms. I suspect that will drive them crazy.

Cats and boxes

Cat heaven.

Image Credits:

Footnotes:

  1. New West joke! []
  2. My current place has the crappy appliances you put in an apartment for a renter []
  3. Mine has crappy carpet that you put in an apartment for a renter []
  4. For my non-BC readers “strata council” or just “strata” is what we call the condo board in BC. []
  5. Home inspection, reading two years worth of strata minutes and strata bylaws and other such fun things. And I have to say, having done the MBA made reading all this stuff way easier, as I could understand all strata financial statements, which I wouldn’t have known how to do before. []
  6. I really wanted to put in the contract that the offer was subject to the approval of my cats and then to bring the cats up to the unit and let them roam around and then say “Yes, they seem to approve. I’ll take it!” But I figured that might not be very professional. []
  7. Hey, remember when the RBC mortgage calculator told me that I was only eligible for a mortgage of between $69-$71 dollars? []
  8. It’s a 25 year amortization on my mortgage, but I’m doing accelerated bi-weekly payments, which immediately drops me down to 22.27 years (based on my current interest rate, anyway) (or less  ((I’m planning on less. I paid my student loans off in record time by making lump sum payments any time I made a little extra money and raising my monthly payments every time I got a raise. I’m planning to do the same thing with my mortgage and my mortgage broker found me a mortgage with a great interest rate that has the flexibility to do that. []

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Why I Will Never Be Able To Own Property

Because I am a glutton for punishment, I filled out the “how much of a mortgage can you afford?” calculator on the Royal Bank’s website.  This is what I got:

Mortgage calculator

So, the bank is willing to lend me somewhere between $68 and $71 to buy a home. I feel so honoured that they feel I could pay this vast sum back within the 35 YEAR amortization that I had to choose in the calculator in order not to receive a “we cannot calculate anything at all for you, you poverty-stricken loser” error message.  I especially love that they figure I can afford $71 paid back over 35 years if I have a downpayment of $30,000.  I mean, if I’m so poor that I can only afford about a one cent per month mortgage payment1, where do they think I’m getting a $30,000 down payment from?

And huzzah!:

Save $12

I could save 12 whole dollars if I make accelerated bi-monthly payments.  I mean, I can’t afford not to!

I guess I’ll check again in about 5 years when my student loans are paid off. Maybe then they’ll let me get a mortgage and I’ll only be slightly into my retirement by the time my mortgage is paid off. Sigh.

I guess I should have taken them seriously when I saw this message before I started the calculator:

You might be surprised

Surprised indeed.  Or, you know, depressed.  Whatevs.

  1. I don’t know what they actually think the monthly payment would be, because it’s been rounded off to $0 []