Homebuying Tools
So you've decided to buy a home. Are you are financially prepared to purchase this house? To avoid any future surprises you can do some financial exercises to see where you stand.
Use the easy to use tools below to help you establish your financial situation. These tools will also help you determine how much you can afford and the maximum amount that you should be considering.
Household Budget Calculator
Compare your income with your current or planned expences and debt payments and see what you can afford.
Mortgage Payment Calculator
A tool to find out how much and how often your payments will be. Compare options and find one that's right for you.
Mortgage Affordability Calculator
Easy mortgage tool to help you estimate the maximum mortgage you can afford.
The first affordability rule is that your monthly housing costs shouldn't be more than 32% of your gross household monthly income. Housing costs include monthly mortgage principal and intrest, taxes and heating expenses- known as P.I.T.H. for short. For a condominium, P.I.T.H. also includes half of the monthly condominium fees. For leasehold tenure, P.I.T.H. includes the entire annual site lease.
The second affordability rule is that your entire monthly debt load shouldn't be more than 40% of your gross monthly income.This includes housing costs and other debts, such as car loans and credit card payments. Lenders add up these debts to determine what percentage they are of your gross household monthly income. This figure is your Total Debt Service (TDS) ratio.
COSTS ASSOCIATED WITH CLOSING A HOME PURCHASE
Your mortgage isn’t your only expense when buying a home. In fact, there are several closing costs that you must pay before you can take possession of your house (to “take possession” means the home is now legally yours). Many of these costs are listed below:
1. Appraisal Fee: This is the cost for a professional to come to your property to assess its value. Your mortgage lender or mortgage default insurer may require an appraisal to determine whether the selling price is reasonable for that market.
2. HST: You must pay the Harmonized Sales Tax on a newly constructed or substantially renovated home. Resale homes do not require a GST payment. Some of this can be recovered with the HST rebate for new or substantially renovated homes.
3. Home Inspection Fee: This covers the cost of a professional inspection of your home. Hiring an inspector is voluntary but recommended for resale homes, and usually costs $400-$600.
4. Property Insurance: Since your lender has a large stake in your home, they will often require you to purchase insurance against fire and weather-related damage. It is also a good idea for you to purchase ‘contents’ insurance to protect your valuables.
5. Land Transfer Tax: This is a tax charged to buyers in most provinces, usually based on the purchase price.
6. Legal Costs: This includes fees charged by your lawyers or notary for services such as conducting a title search, drafting a title deed and preparing the mortgage, and registration fees. This will cost over $500.
7. Mortgage Default Insurance: High-ratio mortgages (those with less than 20% down payment) generally require mortgage default insurance. The cost is usually added to the mortgage and ranges from 1%-3.25% depending on the amount of your down payment.
8. Mortgage Life Insurance: Special insurance coverage to cover the cost of your mortgage in the event of death or severe illness is available from most lenders.
9. Moving Expenses: Costs will vary, depending on whether you do it yourself, rent a truck, or hire professional movers.
10. Prepaid taxes, Utility Bills and Other Charges: Any previous owner may have prepaid some bills before the closing date, which you will have to reimburse them for. All taxes, utility bills, and other charges incurred after the closing date become your responsibility.
11. Utilities: Most utility companies charge for hooking up your services and replacing any previous owner’s names with your name on the bill.
(Source: Genworth Financial)
DISCLAIMER: The newsletter exists for informational purposes only, and are authored and produced independently. As such, it is possible that certain inaccuracies or inconsistencies may occur. The informational content may or may not accurately reflect the research, ideas, opinions or views of the authors or any other featured individual. VERICO Financial Group Inc. assumes no liability whatsoever for any action taken in reliance on the information contained in this newsletter, or for direct or indirect damages resulting from use of this newsletter, its content, or services.
Use the easy to use tools below to help you establish your financial situation. These tools will also help you determine how much you can afford and the maximum amount that you should be considering.
Household Budget Calculator
Compare your income with your current or planned expences and debt payments and see what you can afford.
Mortgage Payment Calculator
A tool to find out how much and how often your payments will be. Compare options and find one that's right for you.
Mortgage Affordability Calculator
Easy mortgage tool to help you estimate the maximum mortgage you can afford.
The first affordability rule is that your monthly housing costs shouldn't be more than 32% of your gross household monthly income. Housing costs include monthly mortgage principal and intrest, taxes and heating expenses- known as P.I.T.H. for short. For a condominium, P.I.T.H. also includes half of the monthly condominium fees. For leasehold tenure, P.I.T.H. includes the entire annual site lease.
The second affordability rule is that your entire monthly debt load shouldn't be more than 40% of your gross monthly income.This includes housing costs and other debts, such as car loans and credit card payments. Lenders add up these debts to determine what percentage they are of your gross household monthly income. This figure is your Total Debt Service (TDS) ratio.
COSTS ASSOCIATED WITH CLOSING A HOME PURCHASE
Your mortgage isn’t your only expense when buying a home. In fact, there are several closing costs that you must pay before you can take possession of your house (to “take possession” means the home is now legally yours). Many of these costs are listed below:
1. Appraisal Fee: This is the cost for a professional to come to your property to assess its value. Your mortgage lender or mortgage default insurer may require an appraisal to determine whether the selling price is reasonable for that market.
2. HST: You must pay the Harmonized Sales Tax on a newly constructed or substantially renovated home. Resale homes do not require a GST payment. Some of this can be recovered with the HST rebate for new or substantially renovated homes.
3. Home Inspection Fee: This covers the cost of a professional inspection of your home. Hiring an inspector is voluntary but recommended for resale homes, and usually costs $400-$600.
4. Property Insurance: Since your lender has a large stake in your home, they will often require you to purchase insurance against fire and weather-related damage. It is also a good idea for you to purchase ‘contents’ insurance to protect your valuables.
5. Land Transfer Tax: This is a tax charged to buyers in most provinces, usually based on the purchase price.
6. Legal Costs: This includes fees charged by your lawyers or notary for services such as conducting a title search, drafting a title deed and preparing the mortgage, and registration fees. This will cost over $500.
7. Mortgage Default Insurance: High-ratio mortgages (those with less than 20% down payment) generally require mortgage default insurance. The cost is usually added to the mortgage and ranges from 1%-3.25% depending on the amount of your down payment.
8. Mortgage Life Insurance: Special insurance coverage to cover the cost of your mortgage in the event of death or severe illness is available from most lenders.
9. Moving Expenses: Costs will vary, depending on whether you do it yourself, rent a truck, or hire professional movers.
10. Prepaid taxes, Utility Bills and Other Charges: Any previous owner may have prepaid some bills before the closing date, which you will have to reimburse them for. All taxes, utility bills, and other charges incurred after the closing date become your responsibility.
11. Utilities: Most utility companies charge for hooking up your services and replacing any previous owner’s names with your name on the bill.
(Source: Genworth Financial)
DISCLAIMER: The newsletter exists for informational purposes only, and are authored and produced independently. As such, it is possible that certain inaccuracies or inconsistencies may occur. The informational content may or may not accurately reflect the research, ideas, opinions or views of the authors or any other featured individual. VERICO Financial Group Inc. assumes no liability whatsoever for any action taken in reliance on the information contained in this newsletter, or for direct or indirect damages resulting from use of this newsletter, its content, or services.
