Mortgage-free in five
TORONTO STAR
DONNA LAPORTE
REAL ESTATE REPORTER
Tharanga Ramanayake paid off a $180,000 mortgage in only five years.
He didn't win the lottery, he had no financial help from family or friends – and he's only 29.
So, how did he do it – two years ahead of his own seven-year plan?
Hard work, chutzpah, talent and determination.
When he was 9 years old, his family immigrated to Canada from Sri Lanka. Although his parents could have afforded a home in their native land, his father always chose to rent, Ramanayake says.
A successful record producer, his father eventually moved back to take care of his business, while mother and son stayed behind in Scarborough.
After Ramanayake's first year in Sheridan College's media arts program, he dropped out.
Intending to become a television editor, he began working part-time at Citytv. When an editing job opened up at Fashion Television, he landed it.
He was 19 years old.
He began saving his money, while living at home. His mother always dreamed of someone in the family owning real estate, having only ever rented herself, so she encouraged him to buy a condo.
In March 2001, he bought a 1,000-square-foot condo with two bedrooms, plus a den, at a CityPlace building and continued to save while it was being built.
Meanwhile, his career advanced quickly and with it, his salary climbed. He became a producer for the creative services department at Citytv, then moved to an advertising agency and eventually became a freelancer working on commercials for the past 1 1/2 years.
He uses the new buzzword title of "preditor," as his work vacillates between editing and producing.
Although he won't reveal what he makes, he says he reached a six-figure income about two years ago.
(While holding down various full-time positions, he also freelanced on other commercials at Citytv.)
"Last year I worked non-stop," he says. He has amassed 12 Promax marketing awards – 11 of those in the past year. (Promax awards are given by a panel of promotion and marketing professionals and are recognized as the highest recognition in the promotion and marketing field.) He also garnered a Gemini, Best Picture Editing in a Documentary Program or Series, for the documentary for Naked in the House.
And he owns a Guinness record for the world's shortest TV commercial, which lasts for one-sixtieth of a second.
He moved to his new condo in April 2003, and it registered on Oct. 1, 2003.
With a purchase price of $274,000, he put down $94,000 ($74,000 plus $20,000 from his RRSP, as a first-time homebuyer), leaving a mortgage of $180,000 – a healthy sum.
To tackle this, he opted for payments of $500 every two weeks, and a 15-year amortization schedule.
His bank also allowed him to pay an extra $200 per month. And, in the final year, he paid an additional $500 every two weeks.
In addition, his condo fees, which started around $370, grew to $550 monthly. Taxes are approximately $3,000 per year.
With such an outflow, you might think he would eat at home and bring his lunch.
Nope. "I do eat out a lot. I don't cook."
One look around his minimalist condo would suggest he only sleeps there, as nothing is out of place.
He doesn't drink coffee and admits to being only a social drinker.
"I don't have unnecessary expenses," he says.
Nor does he have cable television. Although he has to stay on top of entertainment, he prefers movies to theatre and avoids going to clubs.
He figures his biggest saving is in not having a car and working close to where he lives.
When asked whether he ever had the need for a roommate, he says, "Five years ago, with what I was making then, I was able to carry this without a problem."
So, his advice for those who aren't such high earners, is to go for the highest payments they can afford, because they'll pay less in interest over time.
As their income increases, they should pay the mortgage down, using terms available from their financial institution.
For example, he plunked down $27,000 a year ago. When the five-year mortgage was up recently, he paid off the remaining $108,000. Indeed, he could have paid it off two months earlier, but a three-month penalty applied, so he waited.
He knows he is not typical of young homebuyers, but still feels he has some lessons to impart.
"Have a goal and stick to it," he says.
A lot of people "upgrade" their lifestyles when their income increases, whereas he saved as much as he could.
"I didn't move. I didn't upgrade. I didn't go buy a penthouse."
Make sure you can carry the expenses on your current income. Overbidding during the real estate frenzy left some buyers house-poor.
He was so proud, he broadcast his success on Facebook.
"A few people thought it was egotistical to have it on my Facebook status, but hey, I was proud," he says. "I worked hard."
He says he could sell the condo before prices start to soften, but to rent a similar condo would cost $2,500 to $3,000 per month, or he'd have to compromise on space to live more cheaply.
Instead, he says he'll likely take advantage of any real estate correction and buy another property.
How proud are his parents, who have finally bought "an amazing and beautiful house" in Sri Lanka?
He hasn't told them yet.
Surprise!
