StreetSide Developments Blog

By The Numbers: How Downsizing Can Save You Money

Posted on February 03, 2017

by-the-numbers-how-downsizing-can-save-you-money-featured-image.pngEveryone wants more money or, at least, more to invest so they’ll have a nice cushion for the future. This isn’t news, but most people don’t think about a great option to help save money; the option of downsizing their lives. By removing the clutter and unnecessary expenses in your transition to a smaller home, you can dramatically reduce your costs and use that money to pad your cushion.

If you're looking for signs it’s time to downsize into a smaller home, you may consider whether or not your needs are still being met by your current house. Maybe you've realized it’s too big and you’re sick of doing yard work, or perhaps you have too much stuff and you’re tired of paying to store it. Not only can downsizing be your solution, it can be a very smart financial move.

Let’s look at some figures to see where you can potentially net some savings. As of December 2016, the average price for a detached home in Calgary was $548,114. That isn’t peanuts for the average couple (even assuming they are childless) to spend on a nice place with a convenient commute to work. It makes even less sense if you’re a single adult looking to own for the first time or an older couple trying to save up so you can travel more.

If we look at buying a detached house, assuming a mortgage rate of 2.69% (averaged from the rates of five different lenders), the numbers can be worked out:

  • Price to Buy: $548,114
  • Down Payment: 10%
  • Total Down Payment: $54,811
  • Total Mortgage Required: $505,142

With this in mind, you can then amortize these rates over a number of years:

Amortization Period

10 Years

15 Years

20 Years

$4,802

$3,410

$2,720


by-the-numbers-how-downsizing-can-save-you-money-hunter-house-townhomes-image.pngFor this house, you’re also going to have to factor in average monthly costs such as utilities ($300/month), property insurance ($50/month), property taxes ($282/month) and phone/cable/internet ($150/month). This adds up to $780 per month on top of your mortgage.

Now let’s compare this to owning an apartment-style condo. The average price to own a condominium in Calgary in 2016 was $307,705 which is $240,409 less than the price of a house! If we do the same calculations as above, we now can see a significant difference in costs:

  • Price to Buy: $307,705
  • Down Payment: 10%
  • Total Down Payment: $30,771
  • Total Mortgage Required: $283,580

And if we amortize these figures over a set period of years we see less cash per month going out:

Amortization Period

10 Years

15 Years

20 Years

$2,696

$1,914

$1,527


For our monthly expenses, we can calculate that our property taxes will be around $150/month,
condo fees will be about $350/month* and phone/cable/internet combined comes to $150/month. This adds up to $650 per month to be paid alongside a mortgage. As most condos include utilities in their fees, these savings are passed on to the consumer.

On top of this, downsizing to a condo has benefits that can include some “hidden” savings you don’t get with a detached house. Things like heating, water, garbage disposal, snow removal, landscaping, security, and maintenance are usually included in the costs of living in apartment-style condos. Some complexes even include internet service. You may also have access to a fitness facilities, underground parking, and other convenient amenities.

Another great thing about owning a condo is you can lock and leave your new home safe in the knowledge it will be looked after and waiting for you when you return. For people looking to cut down on their time spent looking after their home, this is an easy way to do it. Condos are also available in many parts of the city so it should be relatively easy to find one you like close to family and friends. 

Making the decision to push forward is the first step of downsizing. Consider your lifestyle right now and decide if it’s the right time to make the move. What you choose to do with the time and money you save will make it all worthwhile.

Click here to download the guide!

* These fees are assessed based on floor area. Typically, they are around $0.35 to $0.70 per square foot so a 1000 square foot condo will have fees in the range of $350 to $700 per month.

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Click here to download the guide!

Topics: mortgage & financial

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