How much mortgage can I afford?
When buying a Home, your lifestyle and Home buyers’ plan will have an affect on your preferences for your ‘wish list’ that need to be satisfied when searching for a place to settle down.
Where you want to be located can have a large impact on the price tag and we want you to be aware of what kind of neighbourhoods may be pricier than others and why that might be. A general rule of thumb is the closer you get to the city centre or “downtown,” the price per square footage of your home will increase. This also means that there are likely going to be more amenities within a short drive or even walking distance of your Home.
What to Buy
When looking for your own space, you might be confused as to what type of Home you should be purchasing to best suit your needs.
Are you looking for a single house, duplex, or a condo?
A single-family Home is a detached house that can be great for growing families or for someone looking to have something more private. The initial cost and maintenance for a single-family Home can be much more than what you would find in a condo or duplex.
Duplexes tend to have a lower purchase price which is great for first-time Home buyers or individuals that don’t mind sharing walls with their neighbours. The idea of sharing a wall can be daunting to some but with the modern building techniques available today, it is unlikely that you would be able to hear your neighbours or be disturbed by any noise they might make.
A condo is a private residence building that is filled with multiple units. Something that people tend to love about living in a condo is the security and safety of living in a private building. Also, ‘condo fees’ are part of your monthly payments and include most of your utilities, meaning less work for you in keeping track of all your bills.
How much you like to swipe your credit card or ‘treat yo self’ per month will have an effect on how much mortgage you can afford. In order to be approved for a large mortgage, your personal spending every month should be limited enough so that you aren’t owing anything on your credit cards and all your payments are being made in a timely matter, so you don’t have any monthly debt.
Current Debt Level
Having a higher level of debt can affect how much mortgage you can afford. Lenders like to see interested Home buyers with low debt levels. This way, they know you are going to make your monthly payments on time. Adding a mortgage payment to your stack of bills may be a stressful idea since you will take on more monthly debt.
Money, Money, Money
Your personal net income is a factor when considering how much mortgage you can purchase. If you’re on the lower end of the spectrum, taking on a lesser mortgage is a smart move to ensure consistency in your payments. The regularity of your pay will allow us to find your best suited mortgage plan.
A frequently asked question buyers tend to ask is “What can I afford to borrow?”or “What should my price range be?” The amount of money you can borrow will be determined by your current financial circumstance. This includes your income, debt, personal spending and credit score. Here at HomeHow, we like to say..
You have the ability to borrow a mortgage loan that is equal to 95% of the property value.
Again, that percentage is not a guarantee but is a variable depending on your lifestyle, lines of credit, debt level, etc.
Since your down payment is deducted from the purchase price of your Home, the larger the payment, the smaller your mortgage amount will be. The minimum down payment in Canada is 5%, however, your personal mortgage terms will lay out your amortization period and interest rates which all have an effect on your monthly payment plan and initial down payment.
Qualifying for a Mortgage
The ability to qualify for a mortgage is dependent on a few factors. Your job situation, Home purchase price, debt, personal spending and credit score all affect the type of mortgage you can be approved for. We want to make it easy for you therefore we are able to contact a lender on your behalf so that the process is as efficient as possible. We’ve made it simple for you to answer a couple basic questions or estimate your prices with our affordability calculator so we can assist in finding the best deal possible for you!