(NC) If you plan to buy a house, you are surely asking yourself a lot of questions. In particular, how much will you be able to borrow given your situation, and what options are available for paying less interest?
The Financial Consumer Agency of Canada has developed interactive online tools and calculators to help answer your questions. The mortgage qualifier tool helps you determine whether you qualify for a mortgage based on your income and expenses. The mortgage calculator determines your mortgage payments and generates a mortgage payment schedule, estimating how much money and how many years you can save by making anticipated payments.
Know what you can afford when buying a house
Qualifying for a mortgage does not necessarily mean that you can afford it. The best way to avoid nasty surprises in the long run is to identify and calculate all the costs you will have to pay over and above the mortgage, before committing to buying a property.
Here are a few tips:
- Consider the costs associated with the purchase, such as the down payment, the lowest of which is 5 per cent, mortgage insurance if you are making a down payment of less than 20 per cent, and legal expenses (notary and title transfer expenses).
- Plan your housing budget, including all other associated costs, such as transfer taxes (if you are in Quebec), municipal and school taxes, moving costs, house inspection, repairs and maintenance costs, etc.
- List all the non-discretionary personal and family expenses you will have to pay, such as groceries, electricity bills, telephone, cable, internet, transportation, as well as other loans and credit.
If you have been approved for a mortgage, that means your bank has assessed your credit situation and determined that you are able to repay your debts. However, to maintain your good credit, you will have to draw up a realistic debt repayment plan. You can use the FCAC’s financial goal calculator to determine how to pay off your debts, and the budget calculator to know where exactly your money is going.