With interest rates at an all time low, owning your own home appears just as affordable as renting. Not everyone's financial situation, however, is in the order that lenders are looking for. If you are one of many Canadians still unsure as to whether or not buying a home is a pragmatic decision, read further.
When buying a home there is a great deal more to consider than the property price. Your monthly budget becomes very important. It will tell you exactly what you can afford for financing and ensure that you take all the necessary costs into account.
Your budget for buying a new home should include the following costs:
It is important to remember that being able to afford a home and qualifying for a mortgage are two entirely different things. Consider your personal lifestyle. You do not want your property purchase to result in making you "house-poor" because you purchased a home with the mortgage you qualified for, but maintaining home costs and payments disables you from affording your lifestyle needs. If you enjoy entertaining, dining out, traveling, adventure sports, or other leisure activities, than you may want to consider applying for a smaller mortgage than what you financially qualify to receive, and ensure that you can still partake in your regular lifestyle activities. Lenders often approve financing for sums greater than what you really can afford to remain competitive in today's low interest rate market. Do not commit to financing that you cannot afford. When you apply for your pre-approved mortgage with CanEquity, we will assess your current income, finances, and mortgage needs to make sure the financing you receive is within your budget.
Keeping an accurate view of your financial situation and lifestyle needs in mind is the best way to determine if you are truly ready to purchase a home. Develop a budget that indicates how much you can logistically allocate to a mortgage payment, property taxes, utilities, maintenance and renovations, groceries and other household necessities each month. Once you have determined how much you can, and are willing, to spend on each item monthly, you are ready to figure out how much property financing you need.
Be generous when calculating your costs, but be conservative when calculating your income. This will aid you in remaining realistic. Too many first-time home buyers spend more than they can afford because they are influenced by the excitement of house shopping. Acquiring a smaller mortgage, which you can afford, will assuredly yield greater benefit than becoming strapped for cash and house-bound because you took on a larger mortgage than you could budget.
If you are still unsure of what you can afford to spend on a mortgage, consult a mortgage expert. CanEquity mortgage brokers professionaly work through the mortgage process with clients, nationwide, every day. They will work to find you the best possible mortgage that suits your needs.