September 3rd, 2013 by Lisa J. Gryba, AMP
Understand what’s involved before jumping into home ownership
Your guide to what you can afford when buying a home
- Prepare a budget
Prepare a budget. Make a detailed list of your current monthly expenses. Add everything up and then subtract this amount from your monthly take home amount. This will give you a clear idea of how much you can truly afford for a mortgage payment each month.
- Mortgage payments
The size of your mortgage payments will depend on your down payment, the amortization period (i.e. 25 years), the term (fixed rate, variable rate) and your payment schedule (weekly, bi-weekly or monthly).
- Down payment
The first thing you will need is a down payment. The more money you put down, the less interest you will pay over the life of your mortgage. The minimum mortgage down payment amount that is typically required in Canada is 5%. In order to put less than 20% down, mortgage default insurance is required.
Before you start house hunting, visit an accredited mortgage professional. They will look at your finances and determine the amount of mortgage they are willing to provide to you.
Source: Golden Girl Finance