How much can you afford?
This depends on a number of factors. The most important are your gross household income, your down payment and the mortgage interest rate.
The first affordability rule is that your monthly housing costs shouldn't be more than 32 percent of your gross monthly income. Housing costs include monthly principal, interest, taxes and heating expenses (p.i.t.h.). If applicable, it also includes half of monthly condominium fees. Lenders add up these housing costs to determine what percentage they are of your gross monthly income. This figure is your GROSS DEBT SERVICE RATIO (GDSR).
The second affordability rule is that your entire monthly debt load should not be more than 40 percent of your gross household monthly income. This includes housing costs and other debts such as car loans and credit card payments. Lenders add up these debts to determine what percentage they are of your gross household monthly income. This is your TOTAL DEBT SERVICE RATIO. (TDSR
About the Down Payment
A mortgage is security for a loan on the property you own. It is the difference between your purchase price and your down payment. The greater the down payment, the less you have to borrow, and of course, the smaller your monthly mortgage payment. A few options of down payment include your savings or a non-repayable gift. There are other options available to you and this can be discussed with your REALTOR®.
Other Costs to be Aware of when you Buy
This is a list of possible extra costs involved in buying a home. Some of them are one time costs and others, such as condominium maintenance fees and property insurance, will be ongoing monthly expenses. THE GOOD NEWS IS THAT NOT ALL OF THESE COSTS MAY APPLY IN YOUR CIRUMSTANCES.
Visit www.LisaTollis.ca for more information about Real Estate & Listings in the Ancaster-Hamilton-Burlington Ontario and All of the Surrounding Areas.
Lisa Tollis SRES.
Seniors Real Estate Specialist
Royal LePage State Realty, Brokerage.
Office: 905 574 4600
Toll Free: 1 877 574 4601