How to Increase Affordability

In the current real estate market it is becoming very difficult for the first time home buyers to qualify for a mortgage necessary for their purchase. Mortgage brokers deal with the affordability issue on a daily basis, and they provide the following advice:

Revisit your current debts. When applying for a mortgage, a lender will look at you total debt service (TDS) ratio, or how much of your total income is going towards various types of debts, including car loans, credit cards, and other consumer loans. An Invis Mortgage Consultant can advise on restructuring your current debt (for example, by increasing the amortization and lowering payments on your car loan), to ensure that your TDS ratio is acceptable to prospective lenders.

Increase the size of your down payment. A common way to come up with more cash for a down payment is to make use of the federal Home Buyers' Plan which allows qualifying purchasers to withdraw up to $20,000 each from their registered retirement savings plans (RRSPs) to buy or build a qualifying home without incurring tax penalties. An Invis Mortgage Consultant has full details on the ins and outs of this program.

Look into a longer amortization. Mortgages with 30- or 35-year amortizations feature lower monthly payments than the same size mortgage with a traditional 25-year amortization. While longer amortizations do entail more in interest costs, there are additional strategies to further reduce the amortization and interest costs over the life of the mortgage, such as making lump sum payments down the road or increasing monthly payments (say, after receiving a salary increase).

An Invis Mortgage Consultant can offer valuable advice throughout the financing process on ways to boost affordability.

Courtesy of Jim Rawson of Invis, 416-972-6336 ex. 30

Financing Home Renovations

Did you know that the first three months of the year are the busiest time for planning home renovations? If your spring renovation plans involve larger projects, it can pay to refinance your mortgage, which allows you to get the very best borrowing rates by using the equity in your home. A mortgage refinance will allow you to spread your payments over a longer period of time than with a line of credit.

You should be able to borrow up to 75% of your home’s value with a conventional mortgage, or up to 95% with an insured mortgage. You may also be able to consolidate a range of higher interest borrowings (credit cards and car payments, for example) at the time of your mortgage refinancing.

An Invis Mortgage Consultant can look carefully at your financing needs and advise on how best to secure additional mortgage funding. If you take the time now to establish a clear idea of the improvements to your home and how you will pay for them, you could be putting those plans into action by the time warmer weather finally arrives. Ideally, a well-planned renovation can boost both your enjoyment of your home and its equity.

Courtesy of Jim Rawson of Invis, 416-972-6336 ex. 30