Dear Nancy,
I am recently divorced and as a result I no longer own a house. I am contemplating buying a condo in Toronto, but someone told me I should consider renting. I was laid off from my job, but I do have savings and my portion of the proceeds from the sale of the house. I am living off of my severance package and my savings. What do you think I should do? David
Dear David, sorry to hear about you going through a divorce. It is never easy, even if it was amicable. On top of losing your job, I’m sure your life has taken a turn you did not expect.
As for your future housing situation there are a couple of things you should consider and review.
Paying the cost of the condominium itself will greatly deplete your savings. Right now, you can have the funds pay you an income - whether via dividend or interest income. That should be helping to replace your lost earned income.
It would be very difficult, if not impossible, for you to get a mortgage without a job. If you buy a condo, there will be the ongoing maintenance fee that you will be required to pay monthly. It is unregulated and can be suddenly increased if there is a major repair or expenditure for the building.
My suggestion is that you focus on getting a job and renting an apartment until you are more established with your future. You should look at a rental property where you aren’t at risk of being asked to leave because the owner wants to sell it.
Another thing to consider: you could end up finding a job in another city and then having sell your new condo.
I think it’s best that you become more established in your new life before making a big housing commitment.
Nancy Woods is a Vice President, Portfolio Manager and Investment Adviser with RBC Dominion Securities Inc. Visit her blog, “Nancy’s Notes” at nancywoods.com or send her your question to asknancy@rbc.com
