Getting a mortgage may seem like a big challenge, especially if you're a first-time homebuyer. But there are plenty of options to make it completely affordable! In order to help you get the most out of your home for the best rate, take the following tips into account. They're guaranteed to put you on the right track to getting the best mortgage possible.
1. Know What You Can Afford
The very first thing you'll want to do is get a good grasp on how much you can afford and begin setting forth a budget. But you don’t have to do all the calculations yourself when looking to purchase a new home, this mortgage calculator will give you clear insight into what costs can be expected before you go house hunting.
2. Consider Your TDS and GDS
Your TDS ratio takes a look at your monthly income and compares it to how much is required to cover all debts, such as car payments and housing costs. Overall, your debt load should not exceed 40% of your monthly income.
Your GDS ratio is the percentage of your monthly income allocated specifically to home-related expenses such as mortgage payments, condo fees and property taxes. Your GDS ratio should exceed no more than 32% of your monthly income.
You can calculate both ratios using this super handy GDS and TDS calculator.
3. Look for the Best Rate
In some cases getting a mortgage with your current bank or a builder's preferred lender can be more cost effective. But it's always a smart idea to compare rates within Edmonton and consider which rates will work best for you.
4. Seek Help
There are many government available resources to help you with your mortgage including the First-Time Home Buyers' Tax Credit, and the Homebuyer's Plan. Programs such as these are geared specifically toward first-time homebuyers and will help you front some the costs associated with a home purchase. For more information, see our previous post on Down Payment Basics for First-Time Buyers.
5. Opt for a Larger Downpayment
Canada's mortgage rules require no less than a 5% downpayment on a home, and anything less than 20% will require additional mortgage insurance. However, the more you put down, the less your monthly payments will be. This can really help with your overall costs, as a larger sum up front will give you further financial freedom down the road.
6. Consider Company
With the multitude of homes available, it's easy to choose a floor plan that allows comfortable living for both you and a roommate. This is a great way to generate some extra income simply by sharing your space. In some cases, a roommate may fully pay your mortgage, leaving you to use your income elsewhere.
7. Find Additional Income
Lastly, taking on a second part-time gig you enjoy is an easy way to generate a little extra income. Think of something you could fill your free time with that won’t take too much away from your work/life balance. You wouldn’t believe how much of a difference a little extra work on the side can chip away at your mortgage!
It’s always an adventure being a new home buyer, and the above tips will only serve to make your journey even easier.
Value, choice and flexibility are hallmarks of Sterling Homes so visit a Sterling showhome today and talk to a New Home specialist to help guide you through this process. They can help with mortgage solutions as well as plan options to help make your dreams a reality!