Mortgage Affordability in Canada
Mortgage affordability in Canada is one of the first things to look into if you are looking to become a first-time home buyer, relocating to another province and purchasing a home, or purchasing a more expensive home –you will want to know if you can afford to purchase a home.
As a first time home buyer, you want to ensure that you can afford a mortgage. Some things to do before you finalize a mortgage include:
- Check your credit
- Improve your credit score is it’s poor
- Set a budget for the mortgage that you can afford
- Take into consideration other costs like closing costs, moving, and so on
A mortgage calculator can also help you if you already have a mortgage. You can use the calculator to research mortgages to replace your existing one or to refinance.
Mortgage Calculators for Mortgage Affordability in Canada
By using a Mortgage calculator you can see if you can afford a mortgage. A Mortgage Affordability Calculator will assist you in determining how much mortgage you can afford.
If you want a quick glance to find the average home pricing in Canada and what is salary is required, RentSeeker.ca published this wonderful Annual Housing Market Report INFOGRAPHIC showing the cost to purchase a home in cities across Canada, and the salary needed to support the purchase. Also included is a year-over-year changes purchase.
A mortgage and home purchase is long term so ensure you take the necessary steps to find out if you can afford the mortgage. Comparing Mortgage Rates can save you thousands over the course of your mortgage, at Ratestead.ca we compare the best mortgage rates from top brokers and agents across Canada for you to compare.
How much can you qualify for?
In Canada through the HELOC Canada you may be able to access funds of up to 65% of the value of your home. In some cases individuals still have a mortgage on their home. In this instance the combined balance of your mortgage plus the line of credit that you are going to get cannot go beyond 80% of the home value.
You can determine what your equity is by taking the market value of your home as it is now and multiply this by 80%. Then from this amount subtract the amount that is due on the mortgage. The figure you end up with is how much you can get with the HELOC. However, the amount that you came up with cannot exceed 65% of the home value. To confirm this divide the amount you want from HELOC by the value of the home.
Home Equity Loans Canada
There are many different reasons why a person may require some extra funds. As a Canadian homeowner, you may have an opportunity to get these funds through home equity loans, specifically, a home equity line of credit (HELOC).
How Does Home Equity Line of Credit (HELOC Canada) work?
Once you know the total amount of funds that you qualify for, this sum of money will not automatically be deposited into your account. You only use the amount of money from the fund as you require it. Plus, the interest you will be charged will only apply to the actual amount of money that you are using and not the total amount that you qualify for.
The interest is calculated each day at the variable rate which is attached to the prime rate. You will find that the HELOC interest rates Canada are higher than a variable mortgage rate Canada. If you were to borrow through a variable mortgage the rate is usually Prime plus a percentage. With the HELOC it is prime plus a percentage but that percentage can be changed by the lender at any given time.
As you use money from your home equity line of credit you will have to make payments each month on it. You will only be required to make interest payments on the amount of money that you have used. If you want to pay down the loan then you will have to make extra payments to bring the principal owed down. The good part about this is that there is no penalty charges when you are paying out the amount owed.
There are a lot of great benefits of using HELOC Canada when you are in need of funds. Rather than having to borrow a set amount of money at one time, you can just withdraw the amount that you need at any given time. You have the security of knowing that the rest that you qualified for is sitting there and waiting for you when you need it.