If you are looking to buy a property, affordability is one of the main aspects you should consider. Not only should you be able to afford the monthly mortgage payments, but you should also take into consideration other factors such as interest rate hikes, property maintenance, and insurance. That’s why it is important to make sure you carefully consider your options; you can also work with your local Oakville mortgage brokers to help you make the right investment decision.
Choosing an Affordable Mortgage
When you apply for a loan, banks and financial institutions may offer you a bit more than you feel comfortable with, especially since they make money on the more you borrow. They work on interest rates, which is why you should also carefully work out your budget.
To have a good idea of a guideline – take the monthly cost of your mortgage, plus applicable mortgage taxes, as well as insurance costs, and this should not be more than 30 percent of your monthly net pay. You can always aim higher, but it’s highly recommended that you don’t. If you spend too much on your home you will likely have to cut somewhere else in order to afford your home.
You don’t want to spend too much on your mortgage, forcing yourself to give up other things in life that may be important to you and your family. That’s why you should first find out what you can afford.
The Benefits of a Lower Mortgage
There are many benefits to getting an affordable mortgage. The first is, of course, the fact that you’ll have funds available to save money toward your retirement, or even education. You may also be in a much better position in order to handle any interest rate hikes, should they occur. You can also easily service your other debt, which is why the 30-percent rule is used so often.
You can also choose to perhaps buy a smaller property, in order to comfortably afford your mortgage. As you grow your wealth, you can always move on and buy a bigger, more expensive property. This is why you can start early with your first home, and go from there. Lenders are also more likely to afford you a loan if you start smaller, as your repayment amount will be much lower, to begin with.
There are plenty of mortgage calculators online, and you can also work with your Oakville mortgage brokers to ensure that you choose a mortgage you can comfortably afford.