How To Get Your House And Start Living In Canada For (Almost) Free

A true story of a widening phenomenon in Canadian reality

Frequently, I come across newcomers who struggle with the housing costs in Canada. Apparently the Canadian housing cost is more than 40% of our taxable income, which is 60% of a family budget. These new comers encounter the difficulty during their first years of living in Canada, a stage when they are also not sure about their choice in neighborhood, school for their kids, or even if they like living in Canada.

The newcomer’s perception on what they can and cannot do may be influenced by income and whether they found a stable workplace that allows for future promotions. Quite a few families discover that the money they brought with them, which looked promising initially, melts faster than they imagined. The initial set up cost, including the basic pots and pans, furniture, clothes for the weather and a car, are heavy on their budget. Soon enough, the newcomer finds that they are going to pay at least $2,200 for housing for a four-person family. This huge cost keeps the couple in a constant mode of survival, even when the biweekly paychecks start to come in.

Recently, the Expatistan’s Cost of Living world survey has been published. In this survey one may find Calgary, Vancouver and Toronto in the top 33% most expensive cities in the world. Unsurprisingly, the main component responsible for high living costs and eating away most of a family’s budget is housing costs, ranging from $2,200-$2,400 in either rent or mortgage payments.

The following scenario showcases a simple but highly important way to get housing for almost free:

The Newman family loses an average of $40,000 in their first 18 months of housing, although there are others that would pay only $500 monthly. Across the street lives the Wisdom family. Their income is similar to the Newman’s, yet they don’t struggle at all with their housing costs. On top of allocating only $500 for their residence, they manage to save an additional sum of $900 a month.

How do they do it? Simple, a plan and straightforward execution are the keys. When they landed, the Wisdom family set a goal to purchase a house with 1-2 rental suites. One of the suites had to accommodate a four-person family. The Wisdom family set aside $40,000 for down payment, the same amount they knew they would spend in the first 18 months on housing regardless. They focused on a recommended neighborhood, one they would chose anyway for the first years. The Wisdom’s purchased a $590,000 house, paying a $2,485 mortgage payment and $380 for insurance and annual taxes. The Wisdom family’s total monthly housing expense sums up to $2,900.

But here comes the twist: Contrary to common practice, the Wisdom’s decided to take the bottom suite for their family and rent out the other parts of the house. They rented out the upper unit for $1,800 and the suite above the garage for $600. Their total income became $2,400, which left them a cost of only $500 for their own housing.

Looking closely at the numbers will demonstrate the savings piece. The Wisdom’s family has a monthly mortgage payment of $2,485, most of it paid by their tenants. Out of this monthly payment $1,400 are going towards the principal, building equity. In their first five years of living in Canada, the Wisdom family will create an additional saving of $54,000 (= $900*60 months).

This is the story of Wisdom family, which lives almost for free in their own house. All the calculations were done without taking into consideration the increase in the home’s value that is happening right now in Canadian major cities. If the Wisdom’s will decide to move to a different location, or even go back to their homeland, they will get back $85,000 after selling. Would you be like to be able to get your housing in Canada for (almost) free? Call us, we’ll guide you through it.