125 or even 150k in GTA is a average pay in IT for a mid tier IT worker. I talk to people from other professions e.g. Bankers, non-IT white collar office goers most seem to make less than 70 k even in Greater Toronto. The most shocking I have seen is where my team is implementing Warehouse software for a F500 Manufacturer, the warehouse operators make like 50k generally, the senior most supervisor with 15+ years of experience makes 85k or so. These are all GTA pays, I was shocked to hear and learn of these jobs and people. I can't even imagine how they survive or pay their mortgages.For a person/family, making 250K per year at an age of 28-35, I expect them to have some saving as well. If they are taking a mortgage, this should be minimum 200-300K downpayment. That leave them with a debt burden of 600K - 700K.
Now I will also expect them to take out a mortgage insurance and a buffer of about 75-100K for emergencies. Also, since this is going to be a Condo anyways, I expect them to look into the strata budget. If the strata has some large expense planned or some major issues that were found out during last engineering check of the building, They will mention how much special levy will come on to people living there.
Also, I expect them to try and pay the mortgage earlier by increasing their income --promotions and what not. That means bulk payments capped at 20% per year AND may be some more at the end of 5 years.
So lets do the numbers ... Yup!
125 K per partner is 87K post taxes and deductions. About 7.0 K per month per partner. Thats a good start.
At 700K, for 25 year mortgage at 5.7% for 5 years term is $4350, a fairly reasonable amount if other partner is generating an equal amount of 7.0K per month. I mean in a mess, one can manage with one income of $4350 and may be a bit of dipping into saving if needed but in dual income even with kids it will be workable. If the bad goes to worse, one can reschedule debt to 30 years and reduce mortgage burden.
Any bonus on top of this (stock award, or earlier stock award maturing) will go into paying off the debt. If one can FULLY use their 20% pre-payment limit given, all of debt will be gone in 4-5 years. If not then I expect it to be gone in 10-12 years.
I can understand PRANIT01's dilemma and I was thinking last week where 'Windsor37' is getting his data from when he was talking about 500k Family income and 2.5M house prices.