1. FACT: The average Canadian household owes more money than its annual take home pay Location – urban vs rural, downtown vs suburbs What are some lifestyle choices that dictate how much you need to spend? Career – can impact what you wear, what you drive, etc. (eg. fashion/financial consultant, office worker/businessperson) Sharing vs Alone – having a roommate or living alone will affect the type of accommodation you can afford Family Makeup – children (more space needed, higher payments) vs no children (less space, lower payments)

2. Apartment An apartment is a self-contained unit that is typically located in a much larger building or complex. Most apartments contain between one and three bedrooms. The residents of an apartment building often have shared access to recreation facilities. Your rental costs include utilities.

3. Condominium A condominium is similar to an apartment, however each unit is Individually owned. In some cases the owner will occupy his/her unit,while in other cases the owner lives somewhere else and rents out the unit. Whomever is living in the condo at the time pays condo fees to help run the facilities.

4. Townhouse A townhouse consists of several individual homes joined together in a row, in an attempt to save space. Often referred to as ‘freehold’ townhouses, the owner is responsible for all maintenance and repairs.

5. House The most common type of owned accommodation is a house, but you May still rent a house or even a room in a house, which is common when students move away for post-secondary education. A detached house refers to a single home on a lot, while semi-detached houses share a common wall down the middle. Semi-detached houses are more popular where building space is limited.

6. Now is the time for you to speculate about the advantages and disadvantages of both owning and renting. Here are some facts that you may not yet know about purchasing a new home: When you are approved for a mortgage you must pay a minimum of 5% cash up front – this is the “Down Payment”. For example, if you purchase a condominium for $100 000, you must pay a minimum of $5000 cash up front. Once you own your own property you must pay land taxes (amount varies). You usually want the house you are purchasing inspected by a home inspector in case there are any major complications with the property (usually $200- $400). Legal fees cost vary, but can be anywhere from 1-5% of the purchase price of the home. All repairs that need to be done after you purchase the home are your responsibility (i.e., furnace breaks down, water leaks into the basement, roof repairs, etc). Monthly mortgage payments for a small house/condominium are more affordable than most people think. They are often comparable to what you would spend on monthly rent. There is a lot of pride that comes with owning your own property.

7. Aside from the actual purchase price of a home, there are many other up-front and on-going costs associated with home ownership. It is important to take all of these costs into consideration when deciding to purchase a home. Closing Costs These refer to the one-time costs associated with purchasing a house, whether it is a resale or a new home. These costs go towards legal fees, home inspections, and taxes. Typically, closing costs are approximately 2 - 3% of the value of the house. So for example, if you purchase a house for $160 000, your closing costs will be Approximately $3200- $4800. This amount is in addition to your down payment. Clearly, most people need to save for several years prior to purchasing a house. Owning Accommodations

8. On-Going Costs Generally the mortgage payment represents the single largest cost for owning a home, However there are many other recurring costs that must be budgeted for.  Mortgage Insurance – For high-ratio mortgages (down-payment is less than 25% - 5% is usual minimum), an insurance premium is added to the principal of the mortgage. The insurance premium adds 0.65% - 3% of the purchase price onto your mortgage principal.  Property Taxes – Taxes are levied by the municipality, the region, and for education. These taxes go toward public services such as police, fire, ambulances, roads, parks, schools, etc. Throughout Ontario, the tax rates vary among municipalities. Typically, the total annual tax ranges from 1.2% - 1.5% of the value of the house. So, on a $200 000 home, the annual taxes would range from $2400 to $3000.  House Insurance – You must insure your home and contents against fire and theft. The cost of insurance depends on the size and type of house, the age, the type of heating, etc. A typical house insurance policy costs between $400 - $600 per year.  Utilities – Utilities include electricity, water, and natural gas in addition to phone, Internet, and TV. These costs can vary considerably with the size of your house, the number of people, and the extent of energy conservation. A family in an average size home can expect monthly bills of $100 for natural gas, $50 for water, and $100 for electricity.  Maintenance – The upkeep of a home, especially an older house, is often an over- looked expense. The owner must pay for regular maintenance such as painting and lawn care, as well as periodic expenses such as the replacement of carpet, plumbing fixtures, furnace, windows, or roof. It is advisable to set aside money for such expenditures as they can be unexpected and expensive. Owning Accommodations

9.  One of the main benefits of renting accommodations is that there are far fewer costs than owning a home.  Aside from monthly rent, the only cost of renting accommodations is for optional amenities such as Internet, television, and telephone.  In most rental situations, the cost of water and heating is included in the rent; however, electricity is sometimes not included. Be sure to inquire about what utilities are included when renting accommodations. Renter Beware!!!  Stop and think about what you read while looking for a place to rent. Sometimes landlords use unsupported claims in ads as opposed to facts to get your attention. For example, “Call Now, Rental Won’t Last Long” may try to catch your attention and pressure you into moving quickly so that you don’t lose it to somebody else. Or the ad might say, “Beautiful View”.  Never rush into renting a property. Many places are available and more come on the market every day.  Don’t be afraid to ask questions. In the case of the ad that says “Beautiful View”, call the landlord and ask him/her to describe the view. If it sounds interesting, ask if you can go and look at it.  In the ads that you just read, can you see any misleading information that may be used to get your attention? Renting Accommodations

10. Prior to searching for accommodations, whether owning or renting, it is important to establish what price range is affordable. If you are applying for a mortgage to purchase a home, the bank will analyze your financial situation, and will only lend you an amount of money that it feels you are capable of repaying. There are a couple of simple guidelines for deciding the affordability of accommodations: Affordability Gross Debt Service (GDS) Ratio The GDS Ratio is the ratio of your monthly housing costs to your gross monthly income (i.e., income before deductions). Housing costs include monthly mortgage principal and interest, property taxes, and heating expenses. If applicable, this sum also includes half of monthly condominium fees. The first affordability rule is that your GDS Ratio should not exceed 32%. For example, if your gross monthly income is $3000, then your monthly housing costs should not exceed $960 ($3000 × 0.32 = $960). Total Debt Service (TDS) Ratio Your Total Debt Service includes the housing costs as described above, plus other monthly debts such as car loans, student loans, and credit card payments. The second affordability rule is that the ratio of Total Debt to gross income should not exceed 40%. For example, a young couple has a combined monthly gross income of $8000. According to the second affordability rule, their total debt should not exceed $3200 ($8000 × 0.40 = $3200).