Downpayments, Annual Interest Rates, What Can I afford?
Knowing what you can afford when buying a home is very important as it sets your expectations in line with your financial position. If you begin looking at houses before you have a rough budget established, you'll undoubtedly set yourself up for disappointment. Buying real estate within your means is one of the cardinal rules all people must follow. Otherwise, this leads to situations such as the sub-prime lending bubble in the United that caused a global recession in 2009.
In Canada, we have a highly stable lending system that is closely monitored by the Bank of Canada (BoC) to ensure situations which occur in the United States never happens in Canada. Due to this oversight by the BoC, Canadian cities have seen immense growth in home values which have caused them to implement further protections though what is called the Mortgage Stress Test. This test is to ensure that, in the case of a substantial increase in the lending rate by the BoC, homeowners will continue to be able to afford their monthly mortgage payments when refinancing their homes.
It is important to note that you should always contact your bank or a qualified Mortage Broker to get pre-approved for a home loan before beginning your search for a new home. If you'd like a referral to a Mortgage Broker, please don't hesitate to contact us.
The Mortgage Calculator below is a simple calculation which will give you a rough idea of what you should be budgeting when planning to purchase a home. If you have a house to sell to finance your next home purchase, please refer to our seller information page.
This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate.