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The lifestyles of the rich and famous include designer clothing, expensive meals, and homes with seven-figure price tags. In this home series blog, we’ll let you guess which celebrity’s home is more expensive. In other words, who has a bigger mortgage?
It’s likely that Britney Spears doesn’t roll with $5M in cash on hand, so she probably had to get a mortgage and shop for the best mortgage rates on the market. Too bad for her Ratehub is only in Canada!
With the end of Oprah’s successful television series, we thought it would be fun to take a look at what years of revelations, heartache, laughter and tears bought this media mogul. More specifically, where has Stedman’s sugar mama been residing since the end of her TV series? Well, Oprah has a couple residences, but her California abode is beyond compare.
In fact, at a cost of $52 million in 2001, Oprah aptly refers to her Montecito California home as “The Promised Land”.
Here are the facts [1]:
And since this site is about mortgages, we’re really going to go wild and calculate Oprah’s mortgage financing options using our trusty RateHub mortgage calculators.
So, let’s assume that Oprah puts in a down payment of at least 20%, because even the wildly wealthy want to avoid mortgage insurance.
Other liberties or assumptions we’ve taken for the purpose of this blog:
Down payment and mortgage insurance
With a down payment of 20% as opposed to the minimum 5%, Oprah does not have to pay mortgage insurance. Take a look at the screenshot and you will notice that this saves her an extra $ 1.4 million.
Mortgage type
If Oprah planned to pay her mortgage off over an amortization period of 25 years (which is the most popular period), at a 5-year variable rate of 2.05%, her total mortgage required would be $41,600,000. Her monthly mortgage payments would amount to $177,168.
Land transfer tax
It is also important to be aware of hidden costs such as land transfer tax because as you can see in the example above, this can result in a significant cost to the home buyer – in this case, a whopping $2 million dollars!
Amortization period and interest saved
Scenario 2: The total interest Oprah would have paid if she had opted for a 5-year fixed rate is $6.9 million over her term.
Scenario 4: The total interest paid with a 5-year variable rate of 2.05% is around $3.9 million over the term (Note that variable rates are subject to fluctuation with the prime rate).
This comparison demonstrates the significant impact a mortgage rate can have on the total amount of interest you pay. Even a few percentage points can add up to thousands of dollars, or millions in this case, that could be better spent elsewhere.
Money saved on mortgage insurance: $1.4 million
Money saved on interest paid: $ 3 million ($6.9 million – $3.9 million)
Total money saved: $4.4 million
What would Oprah buy with her savings? Her ‘favourite things’, of course!
Perhaps she would like to buy 5000 dogs. Roll call!
Or she could trade them all in and buy the world’s most expensive dog, a Tibetan mastiff, for approximately $1.5 million [2]. And she’d have money to burn!
Other possible options:
Invest in Obama’s re-election campaign.
Start up another school or two.
.
Give away 275,000 copies of James Frey’s “A Million Little Pieces”.
Purchase another home to add to her collection.
Start her “own” television network.
Sources:
Residents of Manitoba rejoiced after learning that hockey would be returning to the prairie province. On May 20th, 2011, a deal was finalized that would move the Atlanta Thrashers to Winnipeg. It has been 15 years since the defunct “Jets” last played a game in Winnipeg Arena.
What does this mean for the players in Atlanta? They will have to pack their bags (and bug spray) and move to Mosquito country. There are currently 26 players on the active roster with an average salary of $2.1 million a year. Which brings us to the question…
How much house can they afford in Winnipeg?
Using our Manitoba mortgage affordability calculator, we were able to determine the financial figures of what the average Winnipeg “NHLer” can afford in their new hometown.
The numbers:
We assumed our hockey hero pays $10,000/month to his credit card bills – after all, trophy wives don’t come cheap! We also assumed he has auto obligations of $10,000/month, because trophy wives don’t ride in Honda Civics!
The mortgage calculator estimated the property tax and heating costs for us.
Based on a 20% down payment (even the wealthy want to avoid CMHC insurance!) and using the current lowest 5-year fixed rate in Manitoba of 3.61%; with an amortization period of 25 years…
The MAXIMUM AMOUNT he can afford is…$9,600,378
Breakdown
A full 20% down payment amounts to a cool $2,000,000.
Monthly mortgage payments: $38,390
Land transfer tax: $189,658
Interest paid over the life of the mortgage: $7,143,145
Last year, the most expensive home listed in Winnipeg was $7.45M [1], so either Winnipeg`s new residents will be able to live the high life at a bargain price (of what they can afford), or we can expect a building boom.
With the U.S. housing market still on life support, moving from Atlanta, Georgia to Winnipeg, Manitoba for the average homebuyer means paying more for a home. The average home in Winnipeg is $239,183 [2], that`s almost two and half times more than the median home price in Atlanta which is currently sitting in the neighborhood of $100,000 [3].
Winnipeg is Canada’s 8th largest city with a population of 694,668 people, and with the NHL returning it looks like they can add at least 26 more.
[1] www.cbc.ca
[3] www.ajc.com