Math 11 Essentials

B8: calculate the cost of a loan using amortization tables

B10: calculate the costs associated with renting and apartment or buying a house
House Hunters
It is time for you to buy a house for your family of 4, but you don't know where to begin. How much
should you budget? Should you buy new or old? What type of house do you need? What area best
suits your needs? Before you begin researching the diferent variables, fll in the list of features
that are important to your family, and features that you absolutely don't want. If you are
indiferent to a feature leave the Yes/No column blank, and if you have additional requirements
add them.
Feature Yes/N
o
Feature Yes/
No
Feature Yes/
No
Feature Yes/N
o
Feature Yes/
No
1 bedroom Eat-In Kitchen En-Suite
Bathroom
Within 3 km of
Elementary
School
Hot Tub
2 bedrooms Hardwood
Flooring
Large Backyard Single-Car
Garage
Large Kitchen
for Entertaining
3 bedrooms Carpet Flooring Professional
Landscaping
Two-Car Garage Double Sink in
Bathroom
4 bedrooms Tile Flooring Quiet Street 3+ Car Garage Large Outdoor
Entertaining
Space
5+ bedrooms Single-Level Close to
Downtown /
Nightlife
Finished
Basement
Stainless Steel
Kitchen
Appliances
1 bathroom Multistory Suburbs Updated
Fixtures
Energy Efcient
2 bathrooms Granite
Countertop
Close to Shopping Swimming Pool Detached
3 bathrooms Separate Tub & Close to Public Formal Dining Semi-Detached
Math 11 Essentials
B8: calculate the cost of a loan using amortization tables
B10: calculate the costs associated with renting and apartment or buying a house
Shower Transit Room (Duplex)
4+ bathrooms Walk-In Closet Within 1km of
Elementary
School
Formal Living
Area and
Separate
Family Room
Condo /
TownHouse
Part I: New vs Resale
The frst variable you are going to investigate is New vs. Resale. You aren't sure whether you are going to get more
bang for your buck buying a brand-new build, or buying an older home that is up for resale. In order to make
your decision, you decide to compare 5 new houses and 5 resale houses. The houses must all be from one
geographical area (ie. HRM, South Shore, Cape Breton, etc) and you are to specify the specifc
neighbourhood/community each house is located in (ie Hammonds Plains, North Sydney, etc).
Math 11 Essentials
B8: calculate the cost of a loan using amortization tables
B10: calculate the costs associated with renting and apartment or buying a house
Will you be buying a new house or a house up for resale? Why?
Math 11 Essentials
B8: calculate the cost of a loan using amortization tables
B10: calculate the costs associated with renting and apartment or buying a house
Part II: How Much?
You know that you can aford to spend between $100,000 and $300,000, but you aren't sure what price range will get you the
most value. Using your answer from Part I (will you be buying New or Resale), research 5 houses in each of the following price
ranges. Be sure to also keep your list of important features in mind! Once you have all 15 houses, decide what price range you
are going to stick with (under $110,000; $110,000-$200,000; $200,000-$300,000) and write a brief paragraph about why you
Math 11 Essentials
B8: calculate the cost of a loan using amortization tables
B10: calculate the costs associated with renting and apartment or buying a house
have chosen that price range.
Part III: Location, Location, Location!
Next up, it's time to narrow down your neighbourhood (while keeping to your decisions from Part I and Part II). Now
that you are an expert house hunter, choose the 3 neighbourhoods that you think best suit your needs. Now you
Math 11 Essentials
B8: calculate the cost of a loan using amortization tables
B10: calculate the costs associated with renting and apartment or buying a house
are going to search for 5 houses in each area to compare. Which neighbourhood are you going to live in? Why?
Write a detailed paragraph explaining and supporting your decision.
Part IV: Style
You are now in the home stretch of buying your frst home! Using the information and criteria you have researched
Math 11 Essentials
B8: calculate the cost of a loan using amortization tables
B10: calculate the costs associated with renting and apartment or buying a house
thus far, you will now fnalize what type of house you would like to buy. Your options are Detached (stand-alone
house), Semi-Detached (Duplex), or TownHouse/Condo. Find 5 of each type, in your specifed neighbourhood and
budget, and compare them. Which house are you ultimately going to choose? Why have you chosen that home?
Part V: Pay Up!
1.Now that you have chosen your home, how much must your down-payment be? (Assuming the minimum
down-payment is 15% of the total purchase cost). Show your calculations on a separate sheet.
2.You must take out a mortgage for the remaining balance on your home. Assume that your household yearly
income is approximately $70,000
1
. By completing the table below
2
, decide who you will take out your
mortgage with, and the total cost of your house once the mortgage term ends (assuming you never re-
negotiate your mortgage). Show all of your calculations on a separate sheet of loose-leaf. How much of your
yearly income will be going towards your mortgage? How much does that leave you with for all other
expenses?
Bank Fixed or
Variable
Yearly
Interest
Rate
Term
Length
Total Cost
of House
($)
Total
Interest
Paid ($)
Cost Per
Year ($)
Percentage
(%) of
Yearly
Income
Spent on
Mortgage
Percentage
(%) of
Yearly
Income Left
for Other
Expenses
BMO Fixed 2.99% 5-Year
ING Direct Fixed 4.69% 10-Year
Laurentian Variable Prime
=
3-Year
Scotiabank Variable Prime -0.4%
=
5-Year
1 Based on NS Median Family Income for 2011 and Infation http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil108a-eng.htm
2 All rates taken from http://www.ratehub.ca/current-mortgage-rates-nova-scotia March 2014
Math 11 Essentials
B8: calculate the cost of a loan using amortization tables
B10: calculate the costs associated with renting and apartment or buying a house
BMO Fixed 6.30% 1-Year
PC
Financial
Fixed (with
5% Cash
Back)
5.69% 7-Year
Suggested Resources:
http://www.century21.ca/
http://www.royallepage.ca/en/
ns/citylist
http://www.exitrealtypros.ca/
http://www.remax.ca/ns
http://nsrealtors.ca/
http://www.viewpoint.ca/