Home-buy­ing 101

The Glengarry News - Glengarry Supplement - - News -

How much can you af­ford?

Cal­cu­late how much you can af­ford to spend on hous­ing each month with­out putting your fi­nan­cial health at risk.

These two sim­ple rules will show you what you can af­ford to pay for a home. Un­der­stand­ing these rules can also help you when it’s time to get ap­proved for a mort­gage.

Af­ford­abil­ity rule

Your monthly hous­ing costs should be no more than 32% of your av­er­age gross monthly in­come. This per­cent­age is known as your gross debt-to- in­come or gross debt ser­vice (GDS) ra­tio.

Hous­ing costs in­clude: your monthly mort­gage pay­ment (prin­ci­pal and in­ter­est), prop­erty taxes, heat­ing ex­penses.

Your monthly debt load should be no more than 40 per cent of your av­er­age gross monthly in­come. This per­cent­age is known as your to­tal debtto-in­come or to­tal debt ser­vice (TDS) ra­tio.

Your monthly debt load in­cludes: hous­ing costs, car loans or leases, credit card and line of credit pay­ments.

Plan­ning ren­o­va­tions or im­prove­ments but not sure where to start? Get an En­erGuide home eval­u­a­tion and take the guess­work out of which im­prove­ments can save you most on en­ergy bills. This can be your first step to­wards a more en­ergy ef­fi­cient-home. An en­ergy-ef­fi­cient home is: Less ex­pen­sive to op­er­ate; More com­fort­able to live in; More en­vi­ron­men­tally friendly.

It is im­por­tant to un­der­stand that a house op­er­ates as a sys­tem. Be­sides oc­cu­pant ac­tiv­i­ties and the ex­ter­nal en­vi­ron­ment (e.g. tem­per­a­ture, wind, rain, air qual­ity and noise) the el­e­ments of a house such as in­su­la­tion lev­els, air­tight­ness, win­dow and door types, ven­ti­la­tion rates, heat­ing and cool­ing sys­tems all af­fect each other and this com­bi­na­tion af­fects the over­all house per­for­mance. For ex­am­ple, even if you are in­vest­ing in new heat­ing and cool­ing equip­ment or new win­dows and doors, you can­not op­ti­mize the en­ergy per­for­mance of your house if you are not keep­ing heat in dur­ing the win­ter and out dur­ing sum­mer. This sim­ple home im­prove­ment some­times pays for it­self in less than a year and con­tin­ues to pay back for the life of the house.

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