OTTAWA — Whether it’s the sizzling real estate market or the desire for something just a little bit nicer, the temptation to stretch your homebuying budget may be tough to resist.
But there are numerous factors to take into account before making the biggest purchase of your life, even if you’ve qualified with your lender for more.
John DeRose, who oversees Vancity’s mobile mortgage specialists, says people paying $1,500 a month in rent can’t necessarily afford a monthly mortgage of $1,500.
“When you own a home there are extra costs, so that’s why it is important to sit down and talk to somebody,” he says.
The maximum amount people can spend on a home depends on the size of their down payment and two key ratios.
According to the gross debt service ratio rule, monthly housing costs — which include mortgage payments, property taxes, heating expenses and 50 per cent of any condo fees, if they apply — should not exceed 32 per cent of one’s average gross monthly income.
The second rule, called the…
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