Play­ing it SMART

Cou­ple started sav­ing as teenagers

Calgary Herald - Calgary Herald New Condos - - Front Page - KATHY MCCORMICK

It’s all about hav­ing a plan and stick­ing to it, no mat­ter what the eco­nomic cli­mate. “The key is sav­ing,” says Shane Spencer, 22. Along with Amy Irvine, he re­cently bought a Green­boro at­tached home in Cranston.

Ma­ture be­yond their years, the cou­ple has been sav­ing for a home since both were teenagers.

“We started dat­ing in high school and started to save for a house right away,” says Irvine.

“Peo­ple in high school thought we were crazy. Most of our friends were kids who had the ‘party and hav­ing fun’ mind­set — and that’s great. But we thought if we could plan ahead, we could main­tain a bal­ance and do both.”

The cou­ple opened a sep­a­rate sav­ings ac­count, “one that we couldn’t touch, so it made it dif­fi­cult to with­draw money from it,” says Spencer. “We put in $50 au­to­mat­i­cally each with ev­ery pay­cheque, so it wasn’t no­tice­able.”

With a lit­tle help from their par­ents, they were able to put five per cent down on their “dream home” ear­lier this year, says Irvine. “We just stum­bled across it and it was the deal of the cen­tury, so we jumped in and said: ‘Let’s go for it.’”

The tim­ing is per­fect for a home pur­chase, says Spencer. “With the mar­ket to­day, it’s a great time to jump in and take the plunge from rent­ing to home own­er­ship. There are a lot of great deals out there to be had and a lot of in­cen­tives, es­pe­cially in the new home mar­ket.”

Bill McFar­lane, sales man­ager, builders mar­ket for the Prairies with the Royal Bank, agrees: “We be­lieve it is still a good time to buy. It’s the sin­gle largest in­vest­ment peo­ple are likely to make in a life­time and the val­ues will still go up, es­pe­cially in the long term.”

Even though mort­gage rates have inched up in re­cent months, they are still at his­toric lows — and mort­gage pay­ments will not be much dif­fer­ent from the rent peo­ple are pay­ing now, he says.

An­other plus is that home­buy­ers will also be cre­at­ing eq­uity.

Like most banks, Royal Bank has a sim­ple cal­cu­la­tor on its web­site ( that will help peo­ple de­cide whether it makes sense for them to con­tinue rent­ing or to buy a new home.

Once on the home page, scroll to per­sonal bank­ing, then click Canada un­der bank­ing. On the new page, click on bor­row­ing and credit, then mortgages.

Un­der flex mortgages click on mort­gage cal­cu­la­tors, which will lead you to rent or buy. Click on the cal­cu­la­tor ques­tion­naire un­der rent or buy, and fill in your rent, the mort­gage rate and the amount of time (amor­ti­za­tion) you want to take to pay off the mort­gage.

The web­site will give you the max­i­mum house you can af­ford while keep­ing your monthly pay­ment at, say, $1,500.

For ex­am­ple, if your rent is $1,500 per month at an in­ter­est rate of 5.6 per cent (the cur­rent posted five-year rate is 5.85 per cent, but some banks of­fer dis­counts) and the long­est amor­ti­za­tion pos­si­ble (35 years), the web­site says you could buy a home priced at about $284,000 with a five per cent down pay­ment.

How­ever, a fur­ther $8,500 would need to be added to the mort­gage for the de­fault in­sur­ance pre­mium.

Keep in mind that adding taxes and heat, the monthly pay­ment would be more in the neigh­bour­hood of $2,100 per month.

Still, says McFar­lane, “all fac­tors sup­port buy­ing now.”

That’s es­pe­cially true for first­time buy­ers, he says. “There are gov­ern­ment in­cen­tives as well that help, in­clud­ing the in­crease in the amount of RRSPs peo­ple can use for down pay­ments — up to $25,000 now,” he says.

“There is also a $750 tax credit and if you are buy­ing re­sale, you can get as much as $1,350 back in renos if they’re needed. Th­ese are all things that are sup­port­ing the mar­ket.”

Add on the eco­nomic in­di­ca­tors that have started swing­ing in a pos­i­tive di­rec­tion, and the ad­van­tages of buy­ing now are even more pro­nounced. “Peo­ple sense the prices have bot­tomed out and we saw pos­i­tive job cre­ation in Cal­gary in June,” says McFar­lane.

The Bank of Canada re­cently an­nounced that in their view, the re­ces­sion is over.

So, the real is­sue is com­ing up with the down pay­ment, es­pe­cially for those just start­ing out, says McFar­lane — and that’s where Spencer and Irvine have the ad­van­tage.

Us­ing the same cal­cu­la­tor, if the cou­ple wanted to main­tain pay­ments around $1,500 a month, with a 10 per cent down pay­ment, the house price max­i­mum would be just un­der $302,000.

With 20 per cent down, the max­i­mum would jump to $347,634 — and be­cause no ex­tra mort­gage de­fault in­sur­ance pre­mium would be needed, that would not be added to the cost.

“My ad­vice to kids start­ing out is to put to­gether a down pay­ment — the more the bet­ter,” says McFar­lane.

“Use RRSP money to get you into a po­si­tion to buy be­cause it is a good in­vest­ment with the rates his­tor­i­cally low. Get into prop­erty own­er­ship as early as pos­si­ble so you can grow that eq­uity.”

If mom or dad can help with the down pay­ment, that is a big help, he says — and even if the par­ents buy the home out­right, they only need to put five per cent down, as op­posed to the need to put 20 per cent down if it is strictly an in­vest­ment prop­erty.

Their kitchen has dark wood cab­i­nets and stain­less steel ap­pli­ances.

Pho­tos, Gavin Young, Cal­gary Her­ald

Shane Spencer and Amy Irvine sit with their dog Cosmo on the front steps of their new at­tached home in Cranston in south­east Cal­gary.

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