Megann  Willson

Megann Willson

Real Estate Agent

HomeLife/Realty One Ltd., Brokerage

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Honeymoon or House? You Be the Judge.

Wedding hands


Although COVID has certainly curbed the enthusiasm for large gatherings, at some point it won’t be surprising if we return to the pre-pandemic style of weddings. Is it worth it? Of course you’ll need to decide what’s right for you, but with the average Canadian wedding costing between $22,000 and $30,000, suffice it to say, it begs the question of whether it’s worth spending that money on a single day. (Full disclosure, my own wedding was very small and simple, and it was also more than forty years ago). These days expectations have been fueled by advertising, television, and more.

What could you do with $30,000 instead? There was a time when you could say, “I’d rather use that money as a down payment on a house”. Unfortunately, in a major city like Toronto, that amount is going to barely get you into the very smallest condo, and only if you only want 5% equity. Still, it’s worth considering. Check out my mortgage calculator to find out more. (And don’t forget the other costs, like land transfer tax and lawyer’s fees). You’ll see that if you have a $30,000 down payment, you’ll end up needing closer to $40K when it comes to the “all in” cost of your new home. This seems like a lot. And the mortgage payment (nearly $2500 in this case) may be much more than you’re paying in rent. So why would you buy?

The main reason purchasing is still worthwhile for many Canadians, is equity. That’s the difference between what the bank owns (the mortgage) and you do, in your home. On Day One, it’s the difference between the price and the costs, like the mortgage. From that day forward, is where it gets interesting. The value of your home is most likely to go up. If it appreciates by 5% per year, and you pay it off over 25 years, at the end of the time, your $550,000 asset will be worth over $1,700,000. And all for an investment of 30,000 plus a monthly payment that you might have spent on housing anyway.

Would you rather put the money into something where the value will continue to grow? Or use it up and be left with nothing but some pressed flowers, frozen cake, and memories? Now let’s say, for the sake of argument, you have more savings in the bank, or in your RRSP. Maybe another $30,000. And you make a deal with yourself that you can use whatever portion of that you can save on a wedding, toward increasing your down payment. The first thing to do is to sharpen your pencil and figure out where you can save money on your wedding. Here are some great tips on that, from Moneysense. Whatever you do, don’t go into debt to pay for your wedding, because unlike a house, there’s no equity in a fancy party. If you pay for it using credit, it will end up costing you even more (much, much more, if you use credit cards).

Whatever you choose, make the absolute most of it. Choose wisely. Work with a financial planner to decide how you want to best use your money. (I can recommend a few if you need one). Set a budget, and a limit for yourself, and don’t go beyond that. That includes shopping for a home. Yes, leave yourself some wiggle room. And don’t end up being so cash-strapped that you can’t have an emergency fund, money to spend on home improvements, or enough left over in your paycheque that you can deal with things like more expensive groceries if inflation is rising (as it is right now).

I can’t make the right decision for you. Only you can do that. But if you do want to start building equity for your future, I’m happy to have a conversation and get you started on your plan. (If wedding is your choice, I’ll be glad to send you to a great financial planner, and hope you’ll keep my card for that time in the distant future when a house is calling you). 

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