need advice

animal-inside

Well-known member
Trusted Member
We've been trying to build a house for about 10 years now. We were all set to get mortgage and break ground and then trudeu happened and we put the breaks on our plans. Long story short, but we've been putting money aside for a larger downpayment, but both wife and I have not had a raise in over 15 years.. So each year as stuff costs more, we can save less and less.. We are both finally getting a decent raise this year so we have hopes to maybe build this year..

OUr house would be 450,000- 550,000 dollars all said and done.. The goal is to build a house and not have a huge mortgage payment. We currently have about 90,000$ in a high interest savings account for the downpayment.

We own our current home, but have 150,000K left on the mortgage. Realestate salesmen have looked at our house and said we should take no less than 380,000$ for it. Realistically, I would be happy with 350,000$

I had a thought the other day.. Between wife and I, we have about 200,000$ in investment accounts.. I mentioned to the wife the other day, we could consider pulling all our investments out, combining it with our 90K savings so we have 290,000$ to put down on the new house build and build this year.. And then when our current house sells, we reinvest into our investment accounts.

Wife is terrified to consider draining our investment accounts...

I haven't looked into penalties to pulling out our investments yet, but I will.


Thoughts?
 
We've been trying to build a house for about 10 years now. We were all set to get mortgage and break ground and then trudeu happened and we put the breaks on our plans. Long story short, but we've been putting money aside for a larger downpayment, but both wife and I have not had a raise in over 15 years.. So each year as stuff costs more, we can save less and less.. We are both finally getting a decent raise this year so we have hopes to maybe build this year..

OUr house would be 450,000- 550,000 dollars all said and done.. The goal is to build a house and not have a huge mortgage payment. We currently have about 90,000$ in a high interest savings account for the downpayment.

We own our current home, but have 150,000K left on the mortgage. Realestate salesmen have looked at our house and said we should take no less than 380,000$ for it. Realistically, I would be happy with 350,000$

I had a thought the other day.. Between wife and I, we have about 200,000$ in investment accounts.. I mentioned to the wife the other day, we could consider pulling all our investments out, combining it with our 90K savings so we have 290,000$ to put down on the mortgage.. And then when our current house sells, we reinvest into our investment accounts.

Wife is terrified to consider draining our investment accounts...

I haven't looked into penalties to pulling out our investments yet, but I will.


Thoughts?
My inlaws did this last year, it took over a year to sell their other home but that was a different province amd it took a toll on them. My wife would be hesitant as well but ultimately I think its a good idea.
 
My inlaws did this last year, it took over a year to sell their other home but that was a different province amd it took a toll on them. My wife would be hesitant as well but ultimately I think its a good idea.

I'd rough guess our house would sell relatively quickly compared to others in my area..

Most homes here are actually 500-600K homes. Mine is mid priced home. So if someone is looking to buy, I'd be priced lower compared to most homes for sale. So unless someone is purposely looking for a large higher end home, I think I'd be more appealing in the market.

I could be wrong and I fully understand I could sit on my house for a year or more.

What would be good is that if we take our investments out to have a very low mortage on our build, then we could afford to have both mortgages without living pay check to pay check..

I've actually considered keeping our current house as a rental... I haven't convicned myself of this yet because it would be a part time job for me keeping good tennants in it and keeping up on maintence..

Part of me wants to keep this house as well because my kids might not be able to afford a house in 15-20 years.. if I keep this one, they could always buy me out for it very cheaply.
 
I'd rough guess our house would sell relatively quickly compared to others in my area..

Most homes here are actually 500-600K homes. Mine is mid priced home. So if someone is looking to buy, I'd be priced lower compared to most homes for sale. So unless someone is purposely looking for a large higher end home, I think I'd be more appealing in the market.

I could be wrong and I fully understand I could sit on my house for a year or more.

What would be good is that if we take our investments out to have a very low mortage on our build, then we could afford to have both mortgages without living pay check to pay check..

I've actually considered keeping our current house as a rental... I haven't convicned myself of this yet because it would be a part time job for me keeping good tennants in it and keeping up on maintence..

Part of me wants to keep this house as well because my kids might not be able to afford a house in 15-20 years.. if I keep this one, they could always buy me out for it very cheaply.
I had a rental before it was a pain so if you do make sure the tenants are stable, mine were good but called alot towards the end of the month because rent was late or short by a few days, he worked oilfield. I get the kids piece for sure it would be nice to sell them that one at a discount.
 
If you withdraw you cut off compound interest and in the long run that will make a HUGE difference.

If you get $350k you will have $200k left over for down payment. On a half million that is 40% so any major lender will look at you.

By investments if you mean something protected like RRSP's then you would be doing yourself a disservice touching them. Even if you put the money back the compound interest stops and the difference is night and day after 20-30yrs. If I say "well I'll just put back more" then if I didn't take the money in the first place then I have even more. This is not your first home so no RRSP transfer allowed. Draws from RRSP's are considered income and taxed accordingly which means that number gets put on top of regular income for the year. Typically this means that RRSP is taxed at a high bracket. Right now anything over around $130k or so is taxed at nearly 45%.

Leaving TSFA's intact is the same principal for compound interest. At this time mortgage rates are below market return so it is best to leave the money and should anything happen in the future like rates going to 10%+ then you have a safety net. Withdraw then. With a differential of near 5% paying interest is the option that yields highest net wealth at the end of the game. With all that money in reserve earning tax free interest it is a safety net that can be pulled out at any time.

Having $90k larger mortgage is about $700/mth more to carry.
$300k mortgage is about $2100/mth to carry
$2800mth / 2 people= $1400/mth each person while interest rates are at 4%

Building requires a significant amount of money in reserve. Banks typically do not lend money on open land so you may need to get that taken care of in advance. Also there are a lot of soft costs like blueprints, permits and so on that need to be taken care of. There are ways for people to open up lines of credits and so on to get this process down however most people I know who are in a position to build new have no money concerns on all these up front costs. If you have your heart set on new build then you are in a good position with the new raises to stay where you are and take care of the land purchase getting it free and clear. A half million not including land doesn't get much anymore. Builders are digging their heels in to get $300sqft these days for builders materials slab on grade. You didn't mention how much savings you have now excluding formal avenues like RRSP's and TSFA's.


Short term pain leads to long term gain

Many financial advisors say "If you can carry the rental do it". This excludes having problems with the renters though LOL. You would have to let us know gross income if you need an answer on if you should or even can keep the house as a rental

Edit: I've had a bit to think about this..... A lot hinges on household gross income and what is done with it. With the numbers you mention above you will have the most difficult time doing this (compared to buying a resell) and if you do this it will be the highest possible end cost to you by building. As I mentioned above everyone I know who built took care of all the soft costs and all costs for that matter up to the first down payment to the builder to break ground. The process to build takes a lot of time and they do not tie up any owed money on the massive amount of soft costs...

Lawyer- $1500
Engineer for drawings and survey- $5000 or more for custom. Plans off the net can be had for $2000 but they need to meet local building requirements
Land- Who knows
Building Permits- More time and pain than cost but for a scope of new manufacture the cost is in excess of $1000 in Toronto
Land Clearing- Depends on size of land and what needs to be done. Simple bulldoze of light brush/small trees 100ft x 200ft is about $6000
Service to property- Depends if well and septic ($30,000 min most consider this a necessary evil and does not add value to the house so they pay for it out of pocket instead of paying for it twice over by putting it on the mortgage) or city. Depending on the property $10,000 for gas and $4000 for electric and safe to use the same $5k for sewer and water combined.

The list goes on. If someone takes these costs and uses credit (say line of credit) to pay for them the grand total balloons really quickly. Many lenders will lend the money needed as you go however interest starts immediately. This is why everyone I know pays these up front out of pocket. For all of them once the new house is built they moved in and sold off the house (least common) or they gave it to their child (most common)
 
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I'd rough guess our house would sell relatively quickly compared to others in my area..

Most homes here are actually 500-600K homes. Mine is mid priced home. So if someone is looking to buy, I'd be priced lower compared to most homes for sale. So unless someone is purposely looking for a large higher end home, I think I'd be more appealing in the market.

I could be wrong and I fully understand I could sit on my house for a year or more.

What would be good is that if we take our investments out to have a very low mortage on our build, then we could afford to have both mortgages without living pay check to pay check..

I've actually considered keeping our current house as a rental... I haven't convicned myself of this yet because it would be a part time job for me keeping good tennants in it and keeping up on maintence..

Part of me wants to keep this house as well because my kids might not be able to afford a house in 15-20 years.. if I keep this one, they could always buy me out for it very cheaply.
Honestly man, id say keep it and turn it into a rental. The wife and I bought a house in Philippines $65 k (The community is under construction now) This one we are going to live in. Everything else after will be investment (Rental, Flipping etc)--Our next property we want a Condo by the airport where we will be (75 k roughly) We can get it rented on Airbnb for around $30 a night. Some of these condos are super nice also, almost like a mini resort.

I see no value for us investing in Canada anymore.
 
The wife and I bought a house in Philippines -Our next property we want a Condo by the airport where we will be (75 k roughly) We can get it rented on Airbnb for around $30 a night. Some of these condos are super nice also, almost like a mini resort.
Since you own property there I am going to assume you know that condos in Philippines do not go up in value, they decrease. Stand alone houses increase in value there. Tough sell for me because even offsetting the AirBNB and the massive pain in the ass it is the condo eventually becomes more liability then asset there. My goodness I could almost see the buildings crumbling while I was there. The condos age poorly and deteriorate quickly there.

I was amazed when I discovered this information in the Philippines
 
Since you own property there I am going to assume you know that condos in Philippines do not go up in value, they decrease. Stand alone houses increase in value there. Tough sell for me because even offsetting the AirBNB and the massive pain in the ass it is the condo eventually becomes more liability then asset there.

I was amazed when I discovered this information in the Philippines
Ya, unfortunate. They can be tough to sell if you ever need to. But for us, having one or two generating an income would be nice. The first condo tho is going to stay in the family for the long term.

But ya we have the house so far and a lot of land in the south that we use for fruits.
 
If you withdraw you cut off compound interest and in the long run that will make a HUGE difference.

If you get $350k you will have $200k left over for down payment. On a half million that is 40% so any major lender will look at you.

By investments if you mean something protected like RRSP's then you would be doing yourself a disservice touching them. Even if you put the money back the compound interest stops and the difference is night and day after 20-30yrs. If I say "well I'll just put back more" then if I didn't take the money in the first place then I have even more. This is not your first home so no RRSP transfer allowed.

Leaving TSFA's intact is the same principal for compound interest. At this time mortgage rates are below market return so it is best to leave the money and should anything happen in the future like rates going to 10%+ then you have a safety net. Withdraw then.

Building requires a significant amount of money in reserve. Banks typically do not lend money on open land so you may need to get that taken care of in advance. Also there are a lot of soft costs like blueprints, permits and so on that need to be taken care of. There are ways for people to open up lines of credits and so on to get this process down however most people I know who are in a position to build new have no money concerns on all these up front costs. If you have your heart set on new build then you are in a good position with the new raises to stay where you are and take care of the land purchase getting it free and clear. A half million not including land doesn't get much anymore. Builders are digging their heels in to get $300sqft these days. You didn't mention how much savings you have now excluding formal avenues like RRSP's and TSFA's.


Short term pain leads to long term gain

Many financial advisors say "If you can carry the rental do it". This excludes having problems with the renters though LOL. You would have to let us know gross income if you need an answer on if you should or even can keep the house as a rental
If you withdraw you cut off compound interest and in the long run that will make a HUGE difference.

If you get $350k you will have $200k left over for down payment. On a half million that is 40% so any major lender will look at you.

By investments if you mean something protected like RRSP's then you would be doing yourself a disservice touching them. Even if you put the money back the compound interest stops and the difference is night and day after 20-30yrs. If I say "well I'll just put back more" then if I didn't take the money in the first place then I have even more. This is not your first home so no RRSP transfer allowed.

Leaving TSFA's intact is the same principal for compound interest. At this time mortgage rates are below market return so it is best to leave the money and should anything happen in the future like rates going to 10%+ then you have a safety net. Withdraw then.

Building requires a significant amount of money in reserve. Banks typically do not lend money on open land so you may need to get that taken care of in advance. Also there are a lot of soft costs like blueprints, permits and so on that need to be taken care of. There are ways for people to open up lines of credits and so on to get this process down however most people I know who are in a position to build new have no money concerns on all these up front costs. If you have your heart set on new build then you are in a good position with the new raises to stay where you are and take care of the land purchase getting it free and clear. A half million not including land doesn't get much anymore. Builders are digging their heels in to get $300sqft these days. You didn't mention how much savings you have now excluding formal avenues like RRSP's and TSFA's.


Short term pain leads to long term gain

Many financial advisors say "If you can carry the rental do it". This excludes having problems with the renters though LOL. You would have to let us know gross income if you need an answer on if you should or even can keep the house as a rental

I am feeding my kids dinner so I have brielfy read your reply.. thank you and I will read it in depth later.

Quickly
-we already have the land in our name with power to site. We got this done and then trudue happened. we did lots of permits to break ground, they weren't that much $$ actually.
-we looked into a builder mortgage.. don't need piles of money in resereve.. they give you a mortgage based on estimates and the bank releases portions of the money as you complete different stages of the build.
-our compound interest account would be our high interest savings account.. we created it knowing full well we would be using every penny in it for our new house.


-we've been doing short term pain for long term gain for 10 years.. we are looking at if its time to just go for it.. Part of it is our kids are around 10 years old and the land we own to build is beatful, in the country etc.. wife and I are mid 40's... So do we save for another 5 years and buid our house only for our kids to enjoy it for a few years before they move out? If that happens we would be building a larger house to house our kids only to have them to leave soon after its built... also, being mid 40's, I want to enjoy my built house.... I don't want to build our dreamish home only to move into when I'm 50... yes I know saving longer is more ideal, but at what point is it time to just do it? I can save enough to pay cash for the house if I want.. but I want to live in my new house for a decent amount of years before I kick the bucket.. How ever we save, at some point we will need to take a massive chunk out to build the house.. And long term, I'd rather a low mortgage than a high one.. we are responisble enough to live within our means even with a low mortgage and invest as much as we possibly can.

ya renters are a serious issues in my town.. like they have destroyed many houses.. the nice part of my current house is that its 10 mins outside of time.. in general the biggest shit bag renters live in town and do not want a place in the country
 
I hope you are ok that I cut your edit out seperately to address it.

Edit: I've had a bit to think about this..... A lot hinges on household gross income and what is done with it. With the numbers you mention above you will have the most difficult time doing this (compared to buying a resell) and if you do this it will be the highest possible end cost to you by building.
We know buying an already built resell is by far cheaper.. There are reasons I don't want to mention here that we are building and not buying a resell. Buying a resell is off the table.

As far as our household income, I can PM that to you.. rather not share in the open... we both have proffesional jobs with almost 20 years experiecne each.. but as mentioned, no raises in almost 20 years has been brutal.. but we are supposedly getting a good raise soon.

As I mentioned above everyone I know who built took care of all the soft costs and all costs for that matter up to the first down payment to the builder to break ground. The process to build takes a lot of time and they do not tie up any owed money on the massive amount of soft costs...

Lawyer- $1500
no issues with that
Engineer for drawings and survey- $5000 or more for custom. Plans off the net can be had for $2000 but they need to meet local building requirements
We are 50/50 going to buy a RTM or stick build using a cookie cutter blue print. If we go RTM, we don't need to buy plans.
My wife actually sat down with a house artictech 10 years ago and she designed the house she wanted and paid for prints and copies.. We still got them.

Even if its another 5k, thats no problem.


Land- Who knows
Already have 20 acres in our name with power. We will need to run a gas line which is about 7k. Where we live the water will be cistern which is included in the builders mortgage. Sewer will be a pump out system which is included in builders mortghae

Building Permits- More time and pain than cost but for a scope of new manufacture the cost is in excess of $1000 in Toronto
Pisses me off, but we paid for all the permits (house, water/sewer) already.. about 1200$. Since its been 10 year they have expired and we will need to do them again.

Land Clearing- Depends on size of land and what needs to be done. Simple bulldoze of light brush/small trees 100ft x 200ft is about $6000
Already cleared! It's ready for the foundation to be dug.

Service to property- Depends if well and septic ($30,000 min most consider this a necessary evil and does not add value to the house so they pay for it out of pocket instead of paying for it twice over by putting it on the mortgage) or city. Depending on the property $10,000 for gas and $4000 for electric and safe to use the same $5k for sewer and water combined.
Electricty is already at site.. we paid for it out of pocket already 10 years ago.. 14,000$ beleive it or not.

Gas is 7k.
Sewer/cistern was 22k 10 years ago.. guessing 30k now.


The list goes on. If someone takes these costs and uses credit (say line of credit) to pay for them the grand total balloons really quickly.
We will not use a line of credit.. if needed, instead of putting all our 290k investments into a downpayment, we can hold back 40k for unexpected shit.. putting 250k down or 290 isn't going to change our payment that much.

Many lenders will lend the money needed as you go however interest starts immediately. This is why everyone I know pays these up front out of pocket. For all of them once the new house is built they moved in and sold off the house (least common) or they gave it to their child (most common)
ya I know interest starts imedeiately.. all good.

I know we can swing both mortgages as long as we put a good downpayment on the new build... plus, hpoefully the old house will be rented.. but I just don't know if I want that headache.
 
I am feeding my kids dinner so I have brielfy read your reply.. thank you and I will read it in depth later.

Quickly
-we already have the land in our name with power to site. We got this done and then trudue happened. we did lots of permits to break ground, they weren't that much $$ actually.
-we looked into a builder mortgage.. don't need piles of money in resereve.. they give you a mortgage based on estimates and the bank releases portions of the money as you complete different stages of the build.
-our compound interest account would be our high interest savings account.. we created it knowing full well we would be using every penny in it for our new house.


-we've been doing short term pain for long term gain for 10 years.. we are looking at if its time to just go for it.. Part of it is our kids are around 10 years old and the land we own to build is beatful, in the country etc.. wife and I are mid 40's... So do we save for another 5 years and buid our house only for our kids to enjoy it for a few years before they move out? If that happens we would be building a larger house to house our kids only to have them to leave soon after its built... also, being mid 40's, I want to enjoy my built house.... I don't want to build our dreamish home only to move into when I'm 50... yes I know saving longer is more ideal, but at what point is it time to just do it? I can save enough to pay cash for the house if I want.. but I want to live in my new house for a decent amount of years before I kick the bucket.. How ever we save, at some point we will need to take a massive chunk out to build the house.. And long term, I'd rather a low mortgage than a high one.. we are responisble enough to live within our means even with a low mortgage and invest as much as we possibly can.

ya renters are a serious issues in my town.. like they have destroyed many houses.. the nice part of my current house is that its 10 mins outside of time.. in general the biggest shit bag renters live in town and do not want a place in the country
Just a note. Being 50 isn't old. I joke about it, but honestly I can do everything I did when I was younger.
 
Longer you wait the more it’s gunna cost you no matter what way you look at it the cost of nothing is going down most of all skilled labour if your not doing the build yourself!!!
 
10 years ago I was gonna build a Cottage 24 x 24 garage package. It was going to cost me $41,000 move in ready turnkey, I waited until last year to do it the exact same structure all said on was 77,000 !!
 
Just a note. Being 50 isn't old. I joke about it, but honestly I can do everything I did when I was younger.
It's more about deciding to build the house so we can enjoy it with our kids before they move out.. Origianlly we wanted to build the house when the kids were out of day care so we had lots of time to enjoy it with them.. They've been out of day care for 6 years now, but the truduea era ruined that plan
 
Longer you wait the more it’s gunna cost you no matter what way you look at it the cost of nothing is going down most of all skilled labour if your not doing the build yourself!!!

yes and no... building something now because we know it will cost more in the future isn't a good idea if we can't really afford it lol. but I agree, if we can afford it, we should try to make it happen because nothign gets cheaper.
 
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I’d run test cyp at 200 mg a week and keep an eye on how you feel before adding anything else. Basic bloods at week 6 helped me gauge how things were going.
 
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