P.O. Box 970 640 Trans Canada Highway
One of the best ways to test your financial readiness is to calculate your monthly expenses required to buy a home and live within that budget for six months. Set aside the money in a savings account and see if the remainder of your income is satisfactory to maintain your lifestyle.
Before beginning the process of shopping for a homeit's important to know exactly how much the bank thinks you can afford. They will take into consideration a number of factors including:
The first rule is that your monthly housing costs shouldn't be more than 32% of your gross monthly income. Housing costs include mortgages, taxes, and heating.
The second rule is that your total combined monthly debt payments cannot be more than 40% of your gross monthly income. This includes credit card minimum payments, car payments, etc.
Contact a mortgage broker for an assessment of your situation. Brokers are independent business owners who work with all the banks. They get paid by the lender if you qualify for a mortgage and will often make an extra effort if your application is marginal.
If your profile doesn't fit the two affordability rules there are steps you can take to improve your buying ability.