What You Should Think About When Financing Your Home
If you’re like most Canadians, your home is probably the most important investment you’ll ever make. Whether you’re buying a home or refinancing your existing home, making the right decision now can help save you money and provide greater financial stability for your family in the future.
To help you make an informed decision, Canada Mortgage and Housing Corporation (CMHC) offers the following tips on what you should think about when financing a home:
Calculate in advance how much home you can afford. Mortgage Professionals use a few variables to determine the maximum mortgage you can afford: your household income, your down payment and your debt payments including your new planned mortgage along with major related expenses such as property taxes and heating.
Consider getting a smaller mortgage than the maximum amount you can afford. Your future financial picture may not be the same as it is today. By taking on a smaller mortgage than the maximum amount you can afford, you will gain the flexibility and peace of mind to manage your other obligations today and deal with any unforeseen events that might
occur in the future.
Evaluate the impact rising interest rates could have on your monthly payment. For many homeowners, a rise in interest rates could have a significant impact on their housing costs. For example, if you are renewing a mortgage of $250,000, an increase of just 2 percent in the interest rate could cost you around $300 extra each month. Evaluating the impact of future interest rate increases today could help you avoid potential financial difficulties tomorrow.
Become mortgage free faster by reducing your amortization period. Choosing an accelerated payment option (equivalent to one extra payment per year), making lump sum payments or increasing your regular payment amount all contribute to reducing your amortization period. For example, making one extra payment per year on your 25 year mortgage will make you mortgage-free 5 years sooner.
Call us today (250) 862 1806 to set up your FREE strategy session. Download our Mortgage tool FOR YOUR SMART PHONE. Allows you to calculate payments, check mortgage rates and contact us by phone or email.