“The faster you pay off a mortgage, the more you save in interest,” says Louis-François Éthier, product manager at National Bank.
The truth is, paying off a $100,000 mortgage in a short period of time is extremely difficult without both a sizable and stable income, and relatively few expenses. A small regular payment stretched out over a longer amortization period (the total time required to pay off the mortgage) is usually considered an expensive strategy. This is because mortgage payments mostly cover interest and little of the principal until the interest is paid, so it can take decades to pay off the balance.
“The amount of your mortgage payments should be based on your overall budget,” says Louis-François Éthier.
How much of your budget should go toward mortgage payments?
Most financial institutions recommend that no more than 30% of your total budget go towards mortgage payments, municipal taxes, and heating. “It’s the classic ratio in the industry: mortgage to total debt,” says Mr. Éthier. “It’s crucial to also consider other debts, such as car loans and balances on credit cards. Mortgage counsellors can help you make the right choice.”
Of course, the expected time if would take to pay off the mortgage directly influences the amount that we spend on our regular payments. Continue reading →
Buying your first home as a couple? Check out these six tips.
Become a savvy home-buying duo.
Are you and your partner gearing up to be first-time homebuyers? You aren’t alone.
With real estate prices on the rise, taking on a mortgage payment as a couple may be more realistic than attempting to buy independently.
You may also find the process intimidating ― but fear not. Take note of these six tips that will help you and your partner be properly equipped to make the biggest purchase of your life: Continue reading →
In addition to calling upon a realtor for the purchase of your home, here are some tips provided by homeowners.
Think about the future
It’s essential to consider your needs, lifestyle and financial resources when choosing location. Because after many years, there’s nothing better than truly feeling at home!
Save up a good down payment
Wait until you have a decent down payment from your personal assets so you can get a reasonable mortgage and cover the 3% to 5% start-up costs. About 88% of buyers manage to do it by using their personal savings, including RRSPs and investments. About 41% of buyers save up a down payment of at least 20%; for 31%, it’s between 5% and 19%.
Look into the HBP
The Home Buyers’ Plan (HBP) is a government program that allows you to withdraw up to $25,000 from your RRSP (per person) to buy or build a home. You have up to 15 years to pay it back interest-free.
Do the math
Get preapproved for a mortgage so you can determine your budget and narrow your search to properties that meet your criteria.
Buy a house in a neighbourhood that’s going up in value and focus on the value of the land. What criteria should you consider to evaluate the area’s economic situation? Proximity and diversity of businesses and public services (e.g., schools, daycares, parks, hospitals, public transit) are good examples.
On the not-so-good side, here’s what they reported:
Skipping the home inspection
Underestimating the time and cost of renovations
Accepting a purchase offer with a closing day that doesn’t leave you enough time to find a new home
Not dealing with a mortgage broker
Not insisting that the former owners clear out the house completely before you move in
To find out more about the housing sector, visit www.desjardins.com/home. You can also contact a Desjardins mortgage representative at 1-844-626-2476.
According to Jonathan Haziza, a product manager for mortgage solutions at National Bank, the scale of the costs linked to buying a property tend to be underestimated by first-time buyers. So without further ado, here are some expenses to keep in mind for a realistic portrait of what lies ahead.
Your financial institution may ask for an evaluation of the property’s market worth. This happens when the cost is steep or the property contains various risk factors. Requesting an appraisal is a means of protection: either to ensure that payments won’t be above your means, or to verify that the property is truly worth what you’re about to pay. You’ll therefore need to hire an appraiser to produce the necessary documents.
Inspection fee Hiring a building inspector to check for hidden defects in pre-existing houses is crucial. This will help you avoid bad surprises that could cost you a lot; you’ll have peace of mind knowing that everything is as it should be. Continue reading →
While nearly half of Canadian homeowners don’t plan to sell their homes when they retire, many are still unsure what they’ll do. Moving to a new city or downsizing to a more compact home can offer advantages but, depending on your goals, a few disadvantages as well. If you’re thinking about a post-retirement move, consider these pros and cons before you start packing:
When you relocate to a new city or property…
PRO: Save money on daily expenses: If you relocate to a less expensive area, you’ll be able to stretch your retirement savings further. Consider the benefits of a suburb vs. city, and look to exotic areas that provide a lower cost of living. Need a little inspiration? Mexico, Panama, and Costa Rica are popular post-retirement spots for Canadians. Or, look to Buenos Aires, Argentina, where you can rent a one-bedroom apartment (in a good area!) for as little as $400 a month.
CON: Spend money on moving costs: Even if you’re exchanging your current digs for a less expensive property, moving isn’t cheap — real estate agent expenses, land transfer tax and moving costs can dissolve a big chunk of money. In Toronto, for example, land transfer costs, legal fees and moving expenses alone could be $15,000 or more. Plus, you’ll have to consider the cost of traveling to visit family, but if you pick a tropical locale, Canadian relatives may be more likely to come to you.