True costs of home ownership

So while agonizing over my spreadsheets this weekend and praying that we get a decent offer on the house when it hits the market, I calculated the amount that we actually spend on house-related costs on a monthly basis.  Since our rent will be a fixed, all-inclusive amount, I wanted to see how much money we’d be freeing up on a monthly basis that we could turn around and invest.

When we bought the house originally, we didn’t use near the full amount of mortgage money that banks would have lent us.  We bought close enough to my office that we could get away with not having a second car.  We got a great interest rate.  Still, even with all that, the costs add up.

Our mortgage is $650 every two weeks (we picked an excelerated payment plan).  Property taxes come to $270 a month. Utilities average around $200 a month.  Those are the costs that we planned on when we bought it, but they don’t come close to painting the full picture.

We have trees in our backyard.  One of them fell down and crushed a section of fence.  That ended up being a couple thousand dollars to take care of.  We had someone try to break into the house once.  He failed, but damaged the back door enough that it needed replacing.  There goes another thousand.  (It was never worth it to go through insurance, once the deductible and rate increase was factored in).  Even though we take care of the yard ourselves, there’s still a few hundred dollars a year in supplies.  Plumbing issues, fixing lighting fixtures, and the rest of the general maintenance adds up, even before factoring the occasional big jobs (new roof, deck, etc) that would be needed occasionally.

For new houses, I’ve read that you should budget for 1% of the house value in yearly maintenance.  For old houses, you’re probably looking at 3%. For us, even in the first few years that we owned it, we averaged about 1% without any major jobs.  I’m sure over time it would have easily come to at least 2-3% a year.  That’s another mortgage payment a month, except that I’m never seeing that money again.

All in all, even with rent that’s higher than our mortgage and property taxes combined, we should be saving a minimum of 500 a month extra.  We shouldn’t ever have unexpected major expenses related to our living situation.

The funny thing is of course that we still have two rental properties, and all the costs related to them.  The difference is that they generate income for us, more than enough to cover all costs, and I consider them our main hedge against the next stock market correction/downturn.

So, even if house values are hurt by the new regulations that were put in place in Canada, there’s almost no way this isn’t the best financial decision for us.  I love it when the easy route works out like that!

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