At The Kelowna Condos team, we’re passionate about education and helping our buyers navigate the housing markets. We’ve discussed today’s topic in the past, but we’re going to look at it from a slightly different angle – this is the skinny on calculating how much mortgage you can truly afford…
Buyers need to realize that banks/lenders are in business for their shareholders and those shareholders demand profit. Outside of being legally above board, they do not owe you anything. They will lend you as much money as they believe you will be able to pay back. Take this to heart and remember it. Just because you can borrow a certain amount, it doesn’t mean you should. It is your responsibility (not your lender’s) to make sure you still have money left over to live, save for retirement, top up the college fund for the kids etc. after your monthly mortgage payment has been made.
I think we’ve all heard the term ‘house poor’, and that is something you want to avoid at all costs. With pensions dwindling, you need to make sure you’re saving for the future. You also need to make sure you’re saving for housing repairs and upgrades as well. Of course, buying a property can make a fantastic investment vehicle too, but you don’t want to be putting all of your income into your home. It’s a very risky strategy that will leave you walking a financial tightrope.
Of course, how much you can afford is a deeply personal topic, but the accepted wisdom is to limit your housing expenses to 35% or under of your yearly income. Be realistic though, your income today, may not be your income tomorrow. Have a considered think on what your true income situation is, and base your mortgage decisions around that.
There are also mortgage calculators available to help with your deliberations. Search for mortgage calculator + country and you’ll find a good one. I think we can all agree being ‘house poor’, is something you want to avoid at all costs. If you’re wondering how much of a mortgage you can truly afford, the mortgage calculators can help with that…
If you have been pre-approved, that’s fantastic – congratulations! If you’d like a recommendation to a real estate professional to help you with your real estate journey, reach out, I’d be happy to help. Please remember; just because you have been pre-approved for a certain amount doesn’t you should borrow that sum. It’s up to you to be responsible.
And, let’s end with a fun fact: did you know “mortgage” literally translates as “death pledge” in French? Needless to say, they’re not called mortgages by the banks and lenders in France!
If you have any questions about real estate, please do not hesitate to contact us. We would be delighted to assist you.
