Author Archives: familylending

How to Calculate How Much You Can Afford

Know what you can afford – get a mortgage pre-approval.

When it pertains to securing a mortgage, people would like to be aware of the amount of money they are able to borrow. The following are a few quick formulas to assist you to determine exactly what you are able to afford.

Loan to Value (LTV)

Lenders will only allow you to borrow a certain amount of the property value. This borrowing amount is known as the Loan to Value or LTV. LTV (%) = (the amount of mortgage loan) / (the value of the property).

You may borrow as much as 80 % of your property value (80 % LTV) without fretting about low mortgage rate default insurance fees, or as much as 95 % with default insurance fees. Whether you are obligated to pay CMHC or not, your mortgage rate loan insurance depends on your LTV.

Total Debt Service (TDS) Number

Your TDS number is the percentage of your gross annual income that is required to cover payments associated with your new home, plus costs linked with your other debts.

TDS = (Home expenses + Car Loans + Credit Card Debts + Other Loans) / Gross Income.

Your total debt service number (TDS) should not exceed 40 %. This provides you with a cushion in the event of a financial emergency.

Gross Debt Service (GDS) Number

Your GDS number is the percentage of gross annual income necessitated to cover payments connected with housing, including best mortgage rate payments, interest, property taxes, and heating.

GDS =(Annual Mortgage Payments + Property Taxes + Interest + Condo Fees + Heating) / Gross Annual Income.

Your gross debt service number (GDS) should not surpass 32 %.

Are calculations not your forte? Contact a mortgage broker today for personalized help.

How Accelerated Payments Can Fast Track Your Financial Freedom

Fast track your mortgage with these easy tips.

There are options available to help you enjoy a mortgage-free lifestyle sooner rather than later.

Let’s look at the Different Types of Mortgage Repayment Options

  • Monthly Mortgage Payments
    • The traditional mortgage payment; where the payments are made monthly on the same day each month.
  • Bi-Weekly Mortgage Payments
    • You make payments every second week on the same day.
  • Bi-Weekly Rapid Mortgage Payments
    • Also referred to as accelerated bi-weekly mortgage payments every two weeks and allow you to pay off your mortgage quicker by making an extra payment annually.
  • Weekly Mortgage Payments
    • Making an equal payment each week throughout the month.
  • Weekly Rapid Mortgage Payments
    • Similar to bi-weekly rapid best mortgage rate payments– you make slightly larger payments which in total is an extra payment being made throughout the year.

How does this save me money on my mortgage?

Paying off your low mortgage rate using either a bi-weekly rapid, or a weekly rapid payment schedule can save you interest. For instance, you would end up making 26 ‘half’ payments, the equivalent to 13 ‘full’ payments.

Being mortgage free five years sooner may be a reality!

Accelerated Payments are NOT for everyone

While accelerated Canadian mortgage rate payments prove to pay off your mortgage a lot sooner than traditional monthly payments and can save you thousands of dollars, it may not be for everyone.

With accelerated mortgage payments, you are quite literally accelerating to a future of living mortgage free and enjoying financial freedom.

Hot Real Estate Market: Tips For Buyers

Don’t get burned by a hot market

Know Your Budget

It’s a risk for any buyer to get in over their head with too high of a best mortgage rate investment. Remember to consider all costs related to buying a home and owning a home. You will need to make the mortgage payments, pay the utilities, do household repairs, etc.

Know Your Budget for the Future

Interest rates are at a low; inevitably, they will rise. Before you sign a deal, calculate the amount you would be paying a month for your Canadian mortgage rate if rates rose by 2 or 3 percent.

Separate from the Pack

A number of houses attract a large group of buyers and provoke a bidding war. Search for a house that is a 15-minute walk to transit, needs some renovation work, has a shared driveway, or another feature that most buyers might avoid.

Know Your Needs

Make a list of what you truly need. Also, make a separate list for wants. Remember: you can only make a house bigger if you have enough land (and money). While you can always renovate, you can’t fundamentally change a home’s layout or its location.

Stay Cool

Choose an agent who can help you navigate bidding wars and the best low mortgage rate. Make a pact with your partner to keep your price range and must-have items in mind at all times.

Be patient and wait for the right house or the right offer to come your way!

Construction Mortgages

Considering building a new home? Here is what you will need to understand.

Building a home is complex; your low mortgage rate shouldn’t be.

Let’s take a look at three different ways to finance your newly constructed home in Canada:

  1. Builder/Contractor built a home with your money: Customer has made an agreement with a registered builder to construct their home.
    • Mortgage Options: Completion Mortgage or Progress Draw.
  2. Self-Built Home: Customer would like to act as his/her own contractor.
    • Mortgage Options: Completion Mortgage or Progress Draw.
  3. Builder constructed home with their money: Customer requests funds when the home is 100 % complete.
    • Mortgage Options: Completion Mortgage.

Completion Mortgage

After you have purchased or built your new home through a residential homebuilder you will then require Canadian mortgage rate funds when the house is finished.

Progress Draw Mortgage

This mortgage is a type of funding that is advanced in intervals.

Relevant Terms

  • Solicitor: A progress draw requires a solicitor.
  • Progress Inspection Report: Details progress before the advancement of the best mortgage rate funds.
    • Interest on Draws/Advances: Interest is charged on total amount advanced.
    • Final Advance: Released upon final inspection after verifying that the job is complete.
    • Mortgage Insurance: Land draws are not available under CMHC guidelines.

Completion Stages

There are generally 3 stages to building a house:

  • Roof Stage / Roof Tight— Approximately 35 % complete.
  • Intermediate / Lock Up— Approximately 65 % complete.
  • Final Occupancy / Completion— 100 % complete.

Required Documentation

  • Written employment and income confirmation
  • Proof of down payment or equity
  • Copies of quotes
  • Full appraisal
  • Plans / House specifications
  • Fire insurance certificate

Do you need help working out the details of your construction mortgage? Contact FamilyLending.ca for expert advice.

Bidding War: How To Survive

Do you have what it takes to win a bidding war?

Bidding wars occur when multiple offers are placed on a house. The seller can take any offer, depending on the best conditions proposed.

Do’s and Don’ts.

Be careful not to allow multiple bids steer you into a spiral of “ignorant bidding”. Do your financial homework and know your limits.

How to Determine if Your Bid Fits Your Budget

For argument’s sake, let’s imagine that you have a budget of $400,000.

Step One: Determine Your Monthly Payment

Let’s say the best five year variable closed low mortgage rate, amortized over 25 years is only 2.15 %, making your monthly low mortgage rate payments $1722.98. You may have the opportunity to place a bid as high as $465,000, calculating your monthly payments to be $2002.87.

Step Two: Determine Your Cost in the Long Run.

Using our Mortgage Calculator, you determine that with a $465,000 mortgage, at 2.15 %, you will be paying a total of $600,860.46 over your 25-year amortization period. However, with a $400,000 mortgage, you will be paying a total of $516,869.11 in interest payments. Use our mortgage calculator to calculate your payment schedule.

Step Three: Determine What You Can Afford.

Take a look at the possible shifts in interest rates.

For instance, if you decide to put an offer for $400,000 at 2.15 %, the rate could fluctuate. Those rates could raise to 3.75 %, calculating your monthly Canadian mortgage rate payments at $1987.84. With a $465,000 mortgage, you’re payments would increase to $2,310.87 per month. Planning for the future is a fundamental part of your mortgage strategy. Just because you can afford to place a high bid today (based on current interest rates) doesn’t mean that it is sustainable option for the long term.

Be sure you have a clear understanding of the maximum best mortgage rate you can afford BEFORE you start bidding. Remember to take both your current and future finances into consideration.