Have you ever heard the expression house rich and cash poor? When living in and around Vancouver it can certainly feel that way sometimes. Often I talk with people that have space issues… Either they want to own a space or need more space! Here is an excellent tip on how to feel less house rich and cash poor when it comes to buying and moving up to that next place in Vancouver.
One of the suggestions I give to people that are either renting or looking to move from a condo or townhouse to a house…is to “test drive” their next mortgage. Let’s say your current mortgage (or rent) is $1,000 a month and you want to buy up to a home that would have you paying a larger mortgage, say $2,000 a month. When your mortgage/rent is due each month trying, by paying the $2,000 ($1,000 towards your mortgage/rent and $1,000 to a high interest savings account). These days it is really easy to set up an automatic withdrawal savings plan (this is known as paying yourself first).
This may be a huge shock to your personal, financial and social system… at first! This will do two things for you. First, it will help you save up more of a down payment and help you reach that goal of OWNING more space sooner. Secondly, it will allow you to try out your future financial reality without having the downside of risk. In other words, you will be able to test how the “new” (higher) mortgage feels in terms of your life style so you can evaluate if it is a realistic expectation. Alternatively, one could always scale things back, saving less per month, and taking longer to be financial ready to make your move. Looking on the bright side, you won’t be defaulting on any payments and this will help reduce your risk in the future.
Finally, when you do make your next move, you will already be acclimatized to the payments and will not have to go through the shock of higher payments as you have already been doing that for some time. This allows you to buy with confidence and remove some of the worry out of the equations.
If you want some help figuring out future mortgage payments, check out top mortgage broker sites, such as Kyle Green’s by clicking here, or feel free to get in touch with me and I would be happy to help!