New Rules, how much purchasing power does your debt cost you?
Ever wonder how much that new car payment or line of credit balance is costing you when you start looking for a home? Perhaps you didn’t know that any personal debt you carry restricts the amount of money you can qualify for when purchasing real estate.
If you were planning on purchasing real estate with less than a 20% down payment, your mortgage would need to be insured. The new mortgage rules state that ALL insured mortgages have to qualify at the Bank of Canada qualifying rate, currently 4.64%, instead of your contract rate(the actual rate you pay for the money) . So what does this mean when it comes to your debt? It means that for every $562.00 per month of debt payments going out, it restricts your purchasing power by $100,000 (yes, One Hundred Thousand Dollars).
Household debt is a very important piece of the mortgage qualifying process. Even if you had one loan or car payment left of $281.00, if the debt was not paid out prior to the completion of your real estate transaction your purchasing power would be reduced by $50,000.
Are you thinking about purchasing real estate but have questions about your debt? CONTACT US TODAY!
519-495-4281 or 1-888-635-6109 toll free or info@mortgagesbycraig.com