Lisa Tollis, Real Estate Salesperson
1122 Wilson Street West. Ancaster, ON L9G 3K9
Phone: (905) 648-4451 Fax: (905) 643-7393 Email Lisa

Before Buying, Get Pre-Approved. Call Me, I Can Help! It's What I Do!


  Mortgage | Pre-Approved Mortgages | Current Mortgage Rates

How Much Can You Borrow?

A home is typically the largest purchase you will make in your lifetime, and for most Canadians this means obtaining a mortgage.  The amount of your mortgage will determine the size and location of your new home - not to mention the size of your payments. So how do lending institutions decide how large your mortgage loan can be?

Lending institutions (such as banks, credit unions, trust companies and insurance companies) want to be certain that you are capable of repaying the money you borrow. Consequently, the loan application process is thorough. Lenders consider your income, credit history, debt load, employment history and collateral, including the value of the property you wish to buy.

Although there is some discretion in determining the exact amount, the size of your loan is generally calculated using set formulas - Gross Debt Service Ratio (GDS) and Total Debt Service Ratio (TDS). GDS is the percentage of your gross monthly income (before taxes) required to cover monthly payments on mortgage principal, mortgage interest, property taxes and sometimes heating (often abbreviated as PITH). Your GDS should not exceed 30% to 32% to be eligible for most mortgages. Because many people also owe money to other lenders (car loan, student loan, credit cards, etc.), TDS offers a more accurate estimate of what you can afford. TDS is the percentage of your gross monthly income required to cover PITH plus any other debts. Your TDS should not exceed 40% of your gross monthly income.

There are many other factors that will impact the final mortgage amount. A poor credit history or a spotty employment record, for example, can disqualify you altogether or significantly alter the total. Keep in mind that just because a lender is willing to approve a large mortgage it is no guarantee that you can, in reality, afford the monthly payments.

To truly understand how much you can afford you must examine your other monthly expenses - those not accounted for in the lender's calculations (such as entertainment, charities, vacations, etc.). Remember that you will also need a lump sum down payment (at least 25% for conventional mortgages and as little as 5% for high-ratio mortgages) and money to cover closing costs.

For more information on mortgages, Contact Me at (905) 574-4600 or by E-mail and I will call you right away to assist you and even set you up with one of my Mortgage Consultants.

Not intended to solicit properties currently listed for sale or individuals currently under contract with a Brokerage.

Information is deemed to be correct but not guaranteed.

 


How Much Can You Afford?


 Lisa Tollis, Realtor, Can Help You with Your Mortgage Needs with Her Team of Mortgage Professionals. Call Lisa Today! And Let's Get Started!
Our calculators will help you determine loan amounts, mortgage qualification, affordability or whether you should be renting or buying.

Complete the fields below and click Calculate Now. To view the results of each calculation, click on the various tabs.  To email yourself a copy of the results, click the Receive this Detailed Analysis link.

Required Fields
Term In Years:     
Interest Rate:      %
Cost of Home:  $
Down Payment:  $  
Annual Insurance:  $  
Estimate Insurance to 0.43% of Cost
Annual Property Tax:  $  
Estimate Tax to 1.2% of Cost
Monthly Income:  $
Monthly Debt:  $
Optional Fields
Gross Debt Service Ratio (GDS):     
Total Debt Service Ratio (TDS):     
Condos Fees:  $
Results
  Receive this Detailed Analysis

Your Monthly Payments
 
Loan Amount:
Loan Insurance (%):
Total Loan (Mortgage) Amount:
 
Principal & Interest:
Homeowners Insurance:
Property Taxes:
Condo Fees:
Monthly Loan Insurance (%):
Total Monthly Payment:
Income Needed to Qualify for the Mortgage
Total Monthly Loan Payment:
Total Monthly Debt Payment:
Monthly Loan Insurance (%):
Qualifying Income of % GDS Ratio:
Qualifying Income of % TDS Ratio:
What You Can Afford
We are using the % ratio.
Cost of House:
Down Payment:
Loan Value:
Monthly Principal & Interest:
Monthly Insurance:
Monthly Property Tax:
Monthly Condo Fees:
 
Cost of House = [(Monthly income x Debt Ratio) – monthly tax – monthly insurance – condo fee] /
(monthly interest rate/ function of interest rate)
Renting
Monthly Rent: $
Annual Rental Increases:  %
Monthly Renter Insurance: $
Savings or Investment Rate:  %
 
Owning
Planned # of years in home: 
Yearly appreciation of the home:  %
Annual home maintenance:  %