5 Tips to Boost Your Affordability When Arranging For a Mortgage

The Key to a successful mortage experience is carefully considering all your options and buing within your means so that you can sustain your payments. Borrowers unsure of which approach is best can fall back on certain time-tested strategies for ensuringthey don't overextend.

Here are a few tip boost affordibility when arranging your mortgage:

1) KNOW WHAT YOU CAN AFFORD. A mortgage pre-approval helps you to establish a price range and the maximum mortgage you can reasonably afford. Most lenders will lock-in a rate for up to 120 days when pre-approving potential borrowers for a mortgage.

2) REVISIT YOUR CURRENT DEBTS. When applying for a mortgage , a lender will lok at your total debt service  ratio (TDS) , or how much of your total income is going towards various types of debt , including car loans , crdit cards, and other consumer loans. A mortgage broker can advise on restructuring your current debt  (by increasing the amortization and lowering payments on your car loan , for example ), to ensure that your TDS ratio is acceptable to prospective lenders.

3) LOOK INTO A LONGER AMORTIZATION. Some lenders offer mortages with amortizations longer than the traditional 25- year amortization which result in a lower monthy payment. Those opting for a longer amortization period should plan to make lump sum payments down the road or increase their monthly payments. (say , after receiving a salary increase ) , to lessen the amount of interest they pay throughout the lfe of their mortgage.

4) INCREASE THE SIZE OF YOUR DOWN PAYMENT.  Increasing the size of your down payment means a lower monthly payment. a common way for first time buyers to come up with more cash for a down payment is to make use of the federal Home Buyers' Plan to withdraw up to $20,000 each from a registered retirement savings plan (RRSP) without tax penalty to buy or build a qualifying home. Also, many lenders allow the down payment to come from a properly documented gift, and a borrowed down payment may be possible for some borrowers.

5) CONSIDER LOCKING IN YOUR RATE FOR A LONGER PERIOD OF TIME. If you're uneasy about fluctuating interest ratesand your ability to meet any increases, then a fixed-rate mortage could be a good fit. Many lenders are open to longer fixed terms up to 10 years in some cases. 

Brian Bevington

Brian Bevington

Sales Representative
CENTURY 21 Wenda Allen Ltd., Brokerage*
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