How much mortgage can I afford on my salary calculator Canada?

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How much mortgage can I afford on my salary calculator? The first step to buying a home, before even starting to look at flats, is to know how much money we can ask the bank. Obviously, the value of the loan will depend mainly on our monthly income, but also the amortization period, which in current mortgages is 29 years on average.

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Calculate your loan based on your borrowing capacity

When you shop for a new house, the initial step is to determine how much you can afford (before shopping for the best mortgage rates). Your budget is based on the income of households who want to buy a home, their monthly personal expenses (car payments, credit charges, etc.), and the expenses associated with owning a house (property taxes, condo fees, and heating costs). The mortgage calculator will take these factors into consideration and show you the maximum purchase price that you can afford.

You should check if you have enough cash to buy a home. The required capital is used for the down payment, as well as for the closing costs that must be paid to complete the purchase. One has to estimate how much one can afford to pay, without suffocating. A conservative rule of thumb is to use the mortgage or financial capacity calculators or seek expert advice on the subject.

There are two debt rates, and you will need to know both to proceed with the purchase of a home and find out exactly where you put your feet.  The first is oriented only around your housing costs.

Your debt limit for your home can not exceed 33% of your gross monthly income. So if you are coveting a house that would force you to go into debt more than the 33% limit, your financial institution should refuse the deal. Even better, you should lower your selection criteria and expectations.

The first calculation directly determines the price you would be able to assume if you had no debt. The second calculation determines your total debt ratio, that is, it takes into account all your debts and not just the costs related to your home. This rate must be less than 38% to reassure prospective lenders.

You may, therefore, be able to offer accommodation based on the calculation of the first rate, but depending on your total debt ratio your financial institution may refuse to lend you the necessary funds. That’s why it’s important to honor your student, car or line of credit loans as quickly or diligently as possible. All of these loans influence the overall debt ratio. By the way, credit cards also play a crucial role. Always make your payments on time!

Case Study

Jennifer had made a capital outlay of $ 185,000, roughly the amount she had earned from the sale of her grandfather’s house, which she had received as an inheritance. The house she coveted was $ 385,000, which meant she had to assume a total mortgage (with property taxes) of $ 1,873 per month, $ 100 less than her monthly salary, being an administrative assistant!

Ms. Jennifer has three children and no longer has a spouse. She hoped to get back into a relationship, to find a second job. She used her $ 20,000 savings to live and support her children while she used her salary to pay the monthly installments of her home. Once her savings soared, she was forced to refinance and then refinance again; Then the bank refused a new refinancing, and she was obliged to sell her home, which allowed her not to go bankrupt but to end up with absolutely $ 0 in her pockets.

Who wants to live this nightmare? The case of Mrs. Jennifer is extreme; the fault is certainly to be shared with the financial institution that granted the loan. They did not consider her income. Otherwise, they would have seen that the situation would soon become impossible for her. It is partly the incompetence or lack of professionalism of some, coupled with the temerity, madness or lack of education of others that has led us into the crisis that we are currently experiencing.

Buying a home should certainly not be a traumatic adventure. It’s all about finding out and making informed decisions BEFORE it’s too late.

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