Etienne Beaudoin, Mortgage Professional

What Can You Afford?

Before you start looking at real estate, talk to me about pre-approving a mortgage. Pre-approval means you can see how much you are qualified to borrow and at what rate. This has several advantages:

• It saves time when you make an offer.
• It locks in an interest rate for a certain time, usually three months. This means you can get the locked-in rate if interest rates have gone up, but you can usually get a lower rate if rates have gone down.
• It lets you know how much a financial institution is willing to lend you. But remember: what’s important is not how much you can borrow, but how much you can afford to repay.

Don’t rely on a lender to determine what you can afford. Make your own calculations based on your income after taxes and your total expenses. Make sure you have some flexibility so that you can manage other home buying costs, interest rate hikes, maintenance and repair costs, etc. The Household Budget Calculator is a useful tool in running your numbers and ensuring you will be comfortable with your mortgage amount.