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Buying a home

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What are your thoughts/experiences with buying a place for residency?


I matched to Toronto and am thinking about buying a condo in the 250-350k range. I have room in my LOC to take out a reasonable downpayment (20%), but I don't have anything saved up and I don't have parents or anyone that I can borrow from. I have no spouse/children to consider at this time. I am pretty sure that I can get approved for a mortgage, but is it a smart financial decision?


Reasons for buying:

- stable, predictable income during residency

- will likely be in the same place for 5+ years

- not having to pay rent and worry about moving/changes in rent prices

- possibility of increasing property prices

- paying at least part of money into equity of home as opposed to rent

- interest rates are low right now


Reasons for not buying:

- quite extended in terms of debt when you add up LOC + student loans + mortgage

- opening/closing costs

- condo/maintenance fees

- possibility of decreasing property prices

- interest rates are low right now, but are almost certainly going to rise

- less flexibility (difficult to move, less room in LOC if I ever want to buy a car, travel, etc)

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Most banks will not let you use borrowed funds for a down payment. There are possible ways around this though. Check with your bank or a mortgage broker before buying.


As for whether to buy, if you're going to stay for 5+ years it's probably reasonable, but with low interest rates that are likely to rise I think the potential for appreciation is low right now. You're probably better off to rent in terms of saving money and flexibility, especially if you would consider an inexpensive rental.

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I agree with cheech. I would hesitate about buying in Toronto right now simply because there is a decent chance that the market will be over-saturated in the near future because of all the new condo developments under construction in the downtown core (i.e., the new Lumiere building, College Park Aura, Burano, and others). From what I've read, condo prices are currently still going up in Toronto, but who knows how long this trend keeps up, especially with the possibility of over-saturation.


Also, keep in mind that if you rent, you are basically headache free in terms of upkeep and repair costs that may cost you time and money (god knows you are low on both in residency!!!). If you have a significant other who may be willing to deal with this kind of thing, then you may be a bit better off.


You've already identified lots of issues to think about - good luck with your decision!

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