When you’re in the middle of a hectic search for the right home, it’s important that you don’t buy a property that’s more than you can afford.
There are some time-tested strategies that home buyers can use to make sure they don’t overextend.
When getting a mortgage there are a few tips to follow to boost your affordability:
- You should get a mortgage pre-approval so you know what you can afford.
- If you are looking to get a fixed-rate mortgage, you should get a rate hold to protect against rate fluctuations while you house hunt. A mortgage broker can usually arrange a 120 day rate hold.
- You should think about increasing the size of their downpayment. With a larger than 20% downpayment, you will avoid “high ratio” mortgage insurance fees.
- The federal Home Buyers’ Plan allows you and your spouse to withdraw up to $20,000 each from your RRSPs to buy or build a qualifying home without tax penalties.
- You should make pre-payments on your mortgage to reduce interest costs over the life of the mortgage. Even small prepayments near the beginning of the mortgage can have a big impact on how much interest you pay over the life of the mortgage.
A mortgage advisor can let you know about other ways to make sure that your mortgage debt is manageable.