What Size Mortgage Do I Qualify For?
Before you start looking for the mortgage rates, you need to know how much exactly you can afford to pay; otherwise, you could waste your time looking at homes that are out of your reach. And in this case, it will be hard not to be disappointed when you visit less expensive homes afterward.
To get a fair idea of what you can afford, you need to consider the following:
· Your Family Income
· Your current liabilities (your liabilities) and related monthly payments
· Your estimated monthly housing expenses, calculate mortgage payment, property taxes, property insurance, condominium fees, school taxes, utilities and maintenance
· The closing costs and other non-recurring costs expected
· The way you currently spend your money
· Carefully review ALL your expenses
You have to feed and dress your family, put gas in the tank of your car and have a little fun on occasion. You must also be prepared in case of emergency.
Your mortgage advisor and Mortgage Calculator in Canada will help you make sure you have money left for the necessities of life and for the lifestyle you have chosen. Most lenders use the following calculations to determine the maximum you should spend on your home, as well as your total debt level:
Gross Debt Ratio (GER) not more than 30 to 32% of your gross annual income should be spent on “mortgage expenses”: capital, interest, property taxes and heating (plus condo fees if it takes place).
Total Debt Ratio (RET) The RET evaluates the gross annual income required for payments for all debts: house, credit cards, personal loans and car loans. According to the lender, the payments used to calculate the RET must not exceed 37 to 40% of your gross annual income. Your income and that of your spouse are usually combined to calculate this ratio.
If the cost of housing you have to assume each month does not leave you enough money for your other expenses, some solutions are available to you.
1. First, see if you can reduce expenses related to your “lifestyle.” For example: To improve the cash flow, you could travel less, go less often to a restaurant or buy less clothing.
2. Second, consider short-term expenditures that will disappear. Perhaps you will have repaid your car loan in about a year? Or maybe your children will soon be going to school, which will save you money on daycare costs?
3. Third, consider cheaper homes that still meet your needs but do not require you to tighten your belt too much.
Your mortgage advisor and you may also need to consider spending or changes on the horizon. May you need to replace your car in the coming year? Or, if you are expecting your first child, consider the impact of maternity or paternity leaves on your budget, in addition to the baby’s expenses.
But what matters is that you feel comfortable with the amount of your mortgage, with the term and with the payment schedule. And you also need to feel comfortable with the sacrifices you choose to make.
How much real estate can I afford?
Mortgage financing folders in any case, equity should be at least 20, most preferably up to 40 percent. The purchase of property without equity is only useful with very high salaries. Also, the cost of assets also depends on the current interest rate, i.e., the mortgage interest rate. Currently (as of 2013) we are in a low-interest rate, and the interest rates are in the basement — the interest in our property is increasing.
Currently, there are loans with a ten-year term of less than 3%- an excellent offer. However, such a big decision should of course not only depend on the interest rate level. Anyone who played with the idea of buying real estate should now strike. Experts advise not to spend more than 40 percent of the budgetary charge on interest and amortization so the mortgage can be paid. A longer interest rate linkage can reduce expensive follow-up financing.