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Life Situation: Megan and Sean are looking for their first home in Ontario. They are in their late 20s and have been married for three years. They still have a small amount left to pay towards their student and car loans. They do not have any children but plan to in the near future. Both Megan and Sean have steady stable jobs with good advancement opportunities. They are making housing savings. They do not want to use RRSP Home Buyers Plan for down payment.

Combined Gross Annual Salary

$75,000

After-tax salary

$60,000

Monthly Budget

Rent	800
Food	400
Entertainment	300
Clothing/Laundry	400
Telephone/Cable/Internet	200
Car loan payment	400
Car expenses	200
Insurance life, car	220
Insurance - apartment	30
Household	100
Student loan payment	300
Personal expenses	150
Miscellaneous	150
Savings	1,350*
Total	5,000

* Savings - usually each month they contribute $100 to their emergency savings, $300 to their RRSPs and $950 to their house savings

Net Worth

Assets		Liabilities
Chequing Account	1,500	Car	6,000**
Emergency Savings	6,000	Student Loans	8,000***
Car	14,000
RRSPs	15,000
House Savings	45,000
Total Assests	81,500	Net Worth	67,500

** They will be finished paying for the car loan in 16 months *** They will be finished paying for the student loans in 28 months

Revised Monthly budget for owning

Budget items	Dollar amount
Total

How much left to pay for mortgage per month: ____________

Question 11.6:

Use the CIBC mortgage payment calculator to calculate their mortgage payment. Click on 'buy a home'. then 'skip to calculator' Purchase price 225000. down payment 41000. Use your own recommendations for term and interest rate. Pick the monthly payment option and use an amortization of 25 years. Now click on calculate. On the right-hand side of the screen, bottom, click on payment frequency table. Record your results for the accelerated weekly and monthly payments in the table. Why do accelerated payments save interests?

Question 6

Payment Frequency	Accelerated Weekly	Monthly
Interest Rate
Payment amount
Interests saved over amortization		0
Amortization in years
Payment amount made over a full year
Why do accelerated weekly payments save so much interests? Explain.

Question 5 If their status changes from Renting to Owning, then some items should be removed from the budget shown above but some new items would be added. Think about of those changes and come up with a revised budget. Then monthly after-tax income subtracting the sum of the revised budget should tell how much money is still left for monthly mortgage payment. Assume house maintenance costs 5167 per month leg painting, repairs, etc.). Do not forget housing expenses insurance, taxes, heating, etc.) 5440 per month. Question 5 If their status changes from Renting to Owning, then some items should be removed from the budget shown above but some new items would be added. Think about of those changes and come up with a revised budget. Then monthly after-tax income subtracting the sum of the revised budget should tell how much money is still left for monthly mortgage payment. Assume house maintenance costs 5167 per month leg painting, repairs, etc.). Do not forget housing expenses insurance, taxes, heating, etc.) 5440 per month

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