If you’re unsure about buying a property, it may be because you’re worried about paying your mortgage. No need to be concerned: practical solutions are available. Take a look at your finances and calculate how much you could borrow. Here’s how to start.
Do you have student loans to reimburse? Was your car purchased on credit? No stress. Take a look at your debts and when they’ll be paid off. Your actual and projected debt ratio will give you a view on your ability to reimburse your mortgage.
Since expenses such as restaurant meals, rent and pre-authorized payments can add up quickly, you may not be fully aware of where your money is going. That makes it hard to know how much you can set aside to buy a home. To find out, you need a clear overview of your finances.
On the income side, list your salary as well as any tips, commissions, investment income, pensions, etc.
On the expense side, put your rent, groceries and entertainment but don’t forget the takeout coffees you buy every week or the restaurant lunches you spend on when you don’t feel like bringing your lunch to work.
A good way to get a clear picture of your financial situation is to use your bank card for all your transactions. At the end of the month, you’ll easily be able to see what’s listed in the withdrawal and deposit columns. You’ll know exactly where you’re at.
At that point, you can create a budget with different categories for income and expense items, including the relevant amounts.
The downpayment reduces the amount of your total mortgage loan and the interest included with your payments. Evaluate how much money you can put down on a property, keeping in mind that financial institutions usually require a downpayment representing at least 5% of the home’s price.
The funds for the downpayment can come from your available savings or investments, a donation, an inheritance or even your RRSP if you take advantage of the Home Buyers’ Plan (HBP).
Before you can move into your new home, you’ll have to pay various expenses and fees. Be sure not to overlook them: there are a lot.
Your financial institution may require an appraisal to confirm the property’s market value.
You’ll need to hire a home inspector to make sure there are no issues with the home you want to buy.
Every real estate transaction in Canada requires a legal professional. The fees vary based on a number of factors.
Property taxes, school board taxes and land transfer duties are major expenses that are determined by the municipality based on your home’s value.
Contact your local service providers to find out how much it costs to get utilities hooked up.
Determine which repairs and improvements you’d like to make and calculate the necessary costs.
If you’re not keeping your old furniture and appliances, be sure to budget for this major expense item.
Whether or not you intend to use professional movers, you’ll have some moving costs to cover.
If you’re buying a condo (sometimes called a strata), there will be condo fees to pay each month
Fixed or variable rate? Open or closed term? 3 or 5 years? Monthly or biweekly payments?
Rest assured: we’re here to help you decide what fits your needs. We offer flexible mortgage solutions so you can get the best rate for your budget, maximize your initial downpayment and customize a solution geared to your unique profile.
Contact an advisor who can assist you throughout the process.