How Much Home Can Your Rent Buy?
Buying a home is a big financial step, and it’s hard to
know when you’re really ready to buy. No wonder that
many Canadian renters are still sitting on the white picket
fence when it comes to home ownership.
The exciting news is that it could be time to make your
move. There are a few reasons why. To begin, it’s pretty
simple math: if you can afford to rent, chances are that
you can afford to buy your own home. Your monthly
mortgage payments may be similar to your rent! That
monthly rent cheque doesn’t need to be money out the
window; it could be money that’s building you equity in
your very own home.
Let’s take a look at how rent and mortgage payments
might compare. If you’re paying $1250 in rent each
month, for example, you could be carrying a mortgage
of $211,794. If you’re paying $1500, that’s potentially a
mortgage of $266,663. Forking over $1750 each month?
You could be paying off a mortgage of $321,532!
How are the mortgage payments so affordable?
Firstly, right now you’re benefiting from historically
low mortgage rates. Secondly, you now have access
to longer-amortization mortgages that lower your
monthly mortgage payment. (The examples above were
based on that combination: a 4.1% rate and 35-year
amortization, 5% downpayment
and 3.15% insurance premium, property taxes and heat of $285 per month).
Many first-time buyers opt for the longer 35-year
amortization mortgage to start, but then down the road,
when cash flow and incomes increase, they know they can
ramp up their payments to pay off their mortgages faster!
Think you can’t buy a house because you haven’t saved
up a downpayment? You can buy a home with 5%
down and use some of the flexible options to obtain the
downpayment, for example from gifts, through borrowing,
or cash back incentives. Mortgage insurers and innovative
lenders believe that Canadians benefit from homeownership
– and they’re helping to make it more accessible.
Even if you’ve had past credit problems, new credit repair
mortgages can help transition you to a brighter future.
That’s more good news for renters!
One more hurdle that some renters worry about is
showing enough income to qualify for a mortgage. If
you’re self-employed, for example, there are mortgage
options available that don’t require you to verify your
income. If you have a good credit history and reliable
income-earning capacity, then you may qualify for a
no-income verification mortgage loan.
Still sitting on the fence? Think about this: every time
you sign a rental or lease agreement, you are signing
a long- lasting contract that has no profit potential
whatever – at least, not for you. When you sign a
mortgage loan agreement, not only do you sign onto
homeownership, but you also sign up for a great equity making
opportunity too.
Buying a home makes both financial and emotional sense.
There are the intangible pleasures that homeownership
offers: increased freedom, privacy, and a sense of
community, for example. Then there are the more tangible
rewards: for decades, Canadian homeowners have been
able to leverage their property purchase into a large
financial return. You’re at a moment of real opportunity
right now: this may be the perfect time for you to get on
the right side of that picket fence!
This article was provided by Jen Mikla, AMP. You can contact her for more information at www.mortgagewithjen.com
This blog article is powered by CIR Realty, adding value to you and your business by bringing you innovation and experience. To find out more about us, visit www.cirrealty.ca.