Lifestyle | Where should I live?

Stéphanie* hesitates between her condo, a duplex, a chalet and accommodation in a cooperative. Leaving aside the question of reason for reflection, what is the best decision financially?

The situation

Stéphanie*, a 45-year-old Montrealer, immediately describes herself as a “solo parent” mother by choice of two children aged 7 and 4.

With her annual salary reaching $41,000 last year, she managed to buy a new condo in 2010. Stéphanie is doing miracles with her budget and has no debt.

“My children are still small and I get a lot of used clothes,” she explains. I also buy used ones. For my part, I have a uniform at work, which means that I only need a few little things during the year. I allocate about $800 for family clothing. »

“The holidays take place for the moment at my mother’s in the Gaspé, she continues, so it’s inexpensive. I still put in $900 a year, which allows me to go camping. »

Currently, his condo has only two bedrooms. She would like to have a third one so that the children can each have their own. A court would be welcome, but leaving Montreal is out of the question.

Stéphanie turned the question around and put options on paper. The first: buy a duplex with a friend in her neighborhood worth $600,000. “As I would use the lower part with a larger area and a courtyard, I would pay 60% of the duplex. But can I afford it? “, she wonders.

Otherwise, she has the option of going to live in a housing cooperative, a 5 1/2 at $730 per month, but without a yard. She could sell her condo, invest what’s left and save up to buy a duplex. “But is it worth it? she asks.

Third option: sell her condo, go to a cooperative and buy a cottage that she would use occasionally and rent the rest of the time.

“If I am writing to you today, it is obviously because I am confused and I wonder what the best option is. »

“Unless I stay in my condo and don’t change anything?” By the way, am I in good financial health? “, she concludes.

The answer

Chantal Matos, Advisory Director at Private Management Funds FMOQ, analyzed the four scenarios.

First good news: if Stephanie opts for the status quo and keeps her condo, she won’t run out of money when she retires at age 65. “She must ensure that her cost of living reflects reality,” warns Chantal Matos.

From the outset, the planner points out that Stephanie should not take into account credits for the GST and for solidarity. “They are recalculated from year to year and can change, so we don’t include them in a plan,” she points out.

With a cost of living of $40,000 per year including a $2,500 deposit in the family RESP and the annual mortgage of $10,020, Stephanie manages to have a surplus of $10,000. “I strongly advise him to save in TFSAs and RRSPs,” continues the planner.

Since Stephanie’s income is less than $49,020, she should also apply for the Canada Learning Bond (CLB), advises Chantal Matos. It is $500 the first year and then $100 per year up to a maximum of $2,000 over a 15-year period.

Buying a duplex with a friend

Would it be possible for Stephanie to consider selling her condo and buying a $600,000 duplex with a friend?

The planner redid the calculations. Although condominium fees would disappear, maintenance fees, taxes and the mortgage would be higher. With her mortgage share of $175,000 ($13,200 per year) at a rate of 4.5%, Stephanie would still have $7,000 per year to put into RRSPs or TFSAs, in addition to the $2,500 per year. for the RESP.

Second good news: this option also works.

However, not all banks can finance each part of the duplex for two different people, warns the planner.

“She must have a notarized document for the down payment that each will allocate, if it is not the same amount in proportion to the use of each. The one who gives more in down payment will be given a donation from the surplus that she will inject,” explains Chantal Matos.

“She must also consult a notary specialized in this type of duplex purchase, because she will also need a special agreement for the rights of use between the two parts of the duplex. »

Move to a co-op

“I don’t know why she would choose this option, because the purchase of the duplex works,” says Chantal Matos categorically.

“For ten years, perhaps, she continues, but why wait? To have more money? The value of the building may also increase. »

Buy a cottage and live in a co-op

For this scenario, the planner considered the rent of $8944 per year, the annual taxes of the chalet of approximately $1500 and the other expenses related to the chalet of $5000.

“I made an estimate with a rental income of $10,000, which is in addition to his annual income. Since she receives the maximum federal and provincial family allowances, these amounts would decrease by approximately $2,500 per year, not counting the reduction in the GST and solidarity credits to which she is entitled. »

“With this plan, she will lack money each year to finance the cost of living and she will not be able to save more in her RRSPs and TFSAs. »

* Although the case highlighted in this section is real, the first names used are fictitious.