HOW MUCH CAN I AFFORD IN KITSILANO?
Knowing how much you can afford is one of the first steps of the home buying process. Our simple and easy to use mortgage calculator will help you establish the affordability of a potential home purchase or help define the ceiling of your budget before you begin your home search.
Keep in mind, there are many factors that will ultimately determine your budget for a home purchase that are not included in the calculation below. To get a more precise number, your first step is to get ‘pre-approved‘ for a mortgage through a mortgage broker or through your bank. This process will give you a clear sense of what you can afford and will provide the benefit of ‘locking in’ an attractive mortgage rate for a period of 90-120 days.
Talk to a Mortgage Broker
To get the process started, contact our LiveKitsilano Mortgage Expert:
Tom Prasol from 4FrontMortgages.com is an incredible source of knowledge, creative thinking and will ensure that you get a mortgage that works for you.
Contact him directly at [email protected] or 778-836-6883.
Getting a Mortgage FAQ:
What is a mortgage?
Most people assume that a mortgage is a loan. In reality, a mortgage something that YOU grant to the bank, in this case an interest in the property you are buying, in return for a loan.
What are the different types of mortgages?
(1) The banks define a conventional mortgage as any purchase that has 20% or more of the appraised value in downpayment funds. In this case, no mortgage insurance is required.
(2) For purchases with less than 20% down, termed high-ratio mortgages, mortgage insurance through CMHC or Genworth will be required. The cost of these premiums can be as much as 4.15% of the total loan amount but allows you to put as little as 5% down. The additional costs are added to your mortgage loan.
What’s the difference between amortization period and mortgage term?
Simply, the amortization period is the length of time for which the interest on your monthly payments is calculated while the mortgage term is the actual length of your mortgage contract. The amortization period is typically 25-30 years while the mortgage term will typically be between 2-5 years. With longer amortization periods, you will lower the monthly payment but increase your cost of borrowing. Determining how long of a term to go with may depend on whether you think interest rates will go up or down. Longer terms provide more stability but may also include costly pre-payment penalties. At the end of the term, you are required to repay the full-unpaid balance or re-finance the mortgage.
Should I go with a fixed rate or variable rate?
There is no black or white answer to this question as it will depend on a variety of factors including your risk tolerance and current market conditions. Fixed rate mortgages will keep your monthly payment consistent throughout the term of the mortgage while a variable rate mortgage will have payments that fluctuate with changes to interest rates. Over the long term, variable rates have outperformed fixed rates, but the stability of fixed rates are more commonly chosen.
Am I able to use my RRSP’s for a downpayment?
Yes, with some restrictions. The exception allows for first time home buyers to use up to $25,000 of RRSP funds ($50,000/couple) toward their down payment. To qualify, the following conditions must be met:
- You must not have owned property in past 5 years.
- Funds must have been on deposit for 90 days.
- RRSP funds withdrawn must be clear of loans.
- RRSP’s “locked in” employer’s pension plans NOT eligible.
- Funds must be paid back over 15 years.