How Much Can You Buy?
The purchase of a home is the largest investment of many people’s lives. This purchase not only includes the payments at time of purchase but also the ongoing payments of mortgage amounts, interest and carrying costs associated with owning a home.
The largest cost is the down payment, usually between 5-25% of the total price of the property. In addition to this amount, a deposit is submitted with an offer to purchase. This deposit is credited towards the down payment on closing. Other fees that need to be accounted for on closing include legal fees, Land Transfer Tax, closing adjustments and mortgage fees.
There are a number of ways to figure out the amount of mortgage you can afford and the amount of down payment needed to purchase. Most importantly is the amount of money you have available for down payment and the amount of income you receive. These amounts are weighed against the amount of mortgage you are applying for. These calculations take into account the amount of debt you are going to incur in relation to the debt you already owe. These ratios determine how much mortgage you can afford in a normal year and then is broken down into the payment schedule you decide upon. For most Canadians, mortgage payments are made on a monthly or bi-weekly basis.