Scenario 4 Your clients Matthew & Ruth have come to see you for some advice on purchasing a condominium in Toronto. Matthew & Ruth are at present renting a house for $1,800 per month in Kitchener and need to drive to work everyday. They have lived in Kitchener for over five years and find their commute to Toronto a little too much particularly during winter months. They believe if they move to Toronto, it will save them more time and money, and they also can dispose one car and the savings of the car payment can be used towards some of their mortgage payments in the future. They do not want to spend more than $650,000 on the condo. The condo they plan to buy has a condo fee of $300 per month. They will have to pay property taxes of $240 per month and heating costs will be $200 a month. They believe they will have $180,000 for down payment. This amount will be more than the required 20 percent down payment, and so, they will be able to avoid the CMHC insurance. They will also use the Home Buyers Plan (HBP) to withdraw $35,000 each from their respective RRSPs. Ruth works for TD bank and has been with the bank for over nine years. She earns $80,000 a year. She had saved $45,000 in her TFSA and $40,000 in her RRSP. Matthew is a freelance online tutor and works from his home. He earns $65,000 a year. Matthew has $33,000 in his TFSA and $35,000 in his RRSP. They have 30,000 in their joint savings account and another $4,000 in their joint checking account. Matthew & Ruth have two cars valued at $34,000 & $26,000 respectively. Both the cars are financed and have loan outstanding balances of $27,000 & $ 19,000 respectively. Matthew makes a monthly car loan payment of $500, and Ruth makes a monthly payment of $400. They also jointly have a personal line of credit with an outstanding balance of $7,000. The limit on their line of credit is $15,000. Both hold credit cards with a $10,000 limit. The current balances on the credit card for Matthew and Ruth are $900 & $1,600 respectively. The minimum monthly payment for the credit card and the line of credit is 3% of the credit limit. You explain to them that the prequalification process for the mortgage is based on their income and assets. The mortgage will have an amortization period of 25 years with a five-year term and an interest of 5.10 percent. The five-year Bank of Canada rate is set at 6.84 percent. des Rent $ 18000 PmT Downtown - 180,000 Hey Drive to Work To PORONTO More than 20%. No insurance. Time & money One car. For morgage. Budget 650,0000 Home buyer plan 35000 Ruth Inclave 8000 Fee 300