Fi­nanc­ing home im­prove­ments

The Glengarry News - Glengarry Supplement - - News -

Talk to your lender or bro­ker if your new home needs re­pairs or ren­o­va­tions. There may be fi­nanc­ing op­tions that can be in­cluded with your mort­gage loan. If you make en­ergy ef­fi­ciency im­prove­ments, you may qual­ify for a par­tial re­fund of your mort­gage loan in­sur­ance.

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 debt-to-in­come or to­tal debt ser­vice (TDS) ra­tio.

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

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