There are a ton of benefits to owning your own home but it can be pricey. Can you afford a home? What if you have debt? Can ขายอาคารพาณิชย์ I learn my debt ratio before I apply for a mortgage? Read on to find the answers to these great questions.
How much will I be allowed to borrow?
That's a very good question, we're glad you asked. While the amount you'll be approved for is very specific to your situation, there are a few things that can get you into the ballpark of what your mortgage might look like:
Loan to Value (LTV)is the percentage of your loan compared to the value of the property you're considering. Lenders will only let you borrow up to 80% of a property's value before you'll be required to buy Mortgage Default Insurance (MDI). With MDI you'll be able to borrow up to 95% of the property's value.
LTV (%)= ($ of mortgage loan)/($ of property value)
Assuming you'll be borrowing 80% of the property value gives us another way to look at this is:
$ of mortgage loan = 0.8 x ($ of property value)
How does my down payment factor in?
If your down payment is less than 20% of the property ticket price you'll be required to pay CMHC mortgage loan insurance.
What if I have other debts?
Don't worry, you're not alone. The majority of us carry at least some debt. You don't need to be debt free to apply for a mortgage, but you will need to meet the following criteria:
You'll need to have a Total Debt Service (TDS) Number of less than 40%. TDS is a measurement of how much gross income you make per year compared to the cost of owning your new home plus your other debts. That is:
TDS = (Home expenses + Car Loans + Credit Card Debts + Other Loans) / Gross Income
Also, your Gross Debt Service (GDS) Number will need to be below 32%. GDS is a measurement of your cost of living compared to your annual income, or:
GDS = (Annual Mortgage Payments + Property Taxes + Interest + Condo Fees + Heating) / Gross Annual Income
Whether you are looking at a house for sale, condo for sale or to purchase land you need to know whether or not you can afford it! Becoming a first time home buyer can be scary and carry some risk.
We hope this helps when making the decision to purchase your next property! For more information, contact your local mortgage brokerage.
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