Case 1: Personal Budgeting and planning to buy a House

My name is Emily. I am 22 years old and I am single. I am the third year BBA student at Vancouver Island Universty. I work full time at nails and beauty salon. I have three years experience and I earns $8,000 net after tax and deduction and around $3,000 more included tips and retail commission per month. My gross salary is $132,000 per year. My long-term goal is looking for a house which is listed for around $700,000 to $1,000,000 and that would be amortized over 35 years at annual interest rate 4.20% and down payment is 25% on a purchase price of a property including annual property taxes. Moreover, my shorter-term goals is paying my tuition fee for the fourth year ($20,000 including insurance and bookes). As far as assets and liabilities that I has RRSPs worth $300,000 and $100,000 respectively, and also I have a savings or chequing account worth $50,000. Furthermore, I have a Scotiabank Visa that carries an 17% interest rate and requires minimun payments of 3% per month. The limit of my visa card is $1,000 and approximately I borrow around $100 to $400 per month.

I expect to spend:

- Food is $300 per month

- Bus pass is $40 per month

- Rental house fee is $550 per month including heat, hydro and wifi.

- Personal care ( haircuts, massage) is $200 per month

- Miscellaneous items like clothes, skin care products are around $200 per month

As an extension the financial plan above, provide a strategy for purchasing a house / apartment after you graduate and find work. Make any reasonable assumptions necessary to complete the assignment, but you are required to:

1.Balance cash flows for the next year; 2. Develop and describe implementation and control strategies.

3.Identify the home you wish to buy, including location, cost and any financing issues. Include a broker or MLS description; 4. Explain the costs and requirements of a high-ratio mortgage (90%) versus a lower ratio (80%), focusing on the lifetime cost of the mortgage and the monthly funding requirement and debt/service implication; 5. Identify a prospective lender and describe the expected costs, conditions and features of the proposed mortgage; 6. Assess your suitability for the proposed mortgage and provide the GDS, TDS and maximum mortgage calculations; 7. Explain your choice of fixed / variable rate mortgage; closed / open mortgage, amortization period and any other mortgage features you feel are important. What mortgage rate will you have to pay, and how have you calculated this?