Buying a home on your own is difficult – especially in Toronto, which is one of Canada’s most expensive housing markets. In this blog series, we’re going to look at the average starting salary of a profession, assume the buyer has no major debts and calculate what they could afford to buy in the city.
In Toronto, a first year associate lawyer at a mid-sized firm can expect to earn an average starting salary of $70,000 per year or $5,833 per month. Compared to most professions, this is a great starting salary. And if you quickly save up for a down payment and have no major debts holding you back, you could begin looking into buying a home sooner than later.
After running the numbers through our mortgage affordability calculator, we found that a lawyer earning $5,833 per month could afford a home priced at $478,624. This figure is based on a 20% down payment ($96,172), an amortization period of 25 years and a 5-year fixed mortgage rate of 2.89%. Your maximum affordability is determined using your income and expenses. Lenders run your numbers through two debt service ratios – the gross debt service ratio (GDS) and the total debt service ratio (TDS) – both of which are explained in more detail on our site. For now, let’s take $478,624 and see what it could get you into in Toronto.
Property #1: Downtown Condo
Location: 628 Fleet Street
Asking Price: $475,000
Features: 2 Bed, 1 Bath
Approximate Square Footage: 1,100
Property Taxes: $3,480/year ($290/month)
Maintenance Fees: $516/month
Parking Spaces: 1
This condo is located near the Lake Shore, just steps away from the hustle and bustle of the downtown core. If you purchased this unit with a 20 per cent down payment ($95,000), a 5-year fixed mortgage rate of 2.89 percent and an amortization period of 25 years, your monthly mortgage payment would be $1,777. Add in the monthly property taxes ($290) and maintenance fees ($516) and $2,583 of your income would be going towards housing each month.
Property #2: Suburban House
Location: 31 Rochdale Avenue
Asking Price: $479,000
Features: 3 Bed, 2 Bath
Land Size: 25 x 112.7 ft.
Property Taxes: $2,200.01 ($183.33/month)
Parking Spaces: 1
If you prefer to live in a more spacious home, further from the downtown core, this suburban home offers significantly more space than a similarly priced property downtown. With a 20 per cent down payment ($95,800), a 5-year fixed mortgage rate of 2.89 percent and an amortization period of 25 years, your monthly mortgage payment would be $1,792. Add in the monthly property taxes ($183.33/month) and you could pay only $1,975.33/month to own a home that is a 30-minute commute to downtown.
In the end, the home you choose to live in depends on both personal preferences and priorities. If you don’t mind commuting, you can get a lot more home for your money. But if you want to be within walking distance to all of your amenities, it is possible for a lawyer to purchase a condo in downtown Toronto.