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AFFORDIBILITY
The first affordibility rule is that your monthly housing costs shoudn't be more than 32% of your gross monthly income.Housing costs include monthly mortgage principal and interest, taxes and heating expenses. If applicable, like in "Condominiums", this sum also includes half of monthly condominium fees. This fgure is known as your Gross Debt Services (GDS) ratio and it must be 32% or less.
GDS CALCULATION
Total monthly House Hold Gross Income X 0.32 = GDS
Total monthly house hold incomes means, your monthly gross alary + your spouse's gross monthly salary and any other monthly income (may be from investments or other sources).
Gross salary is income before taxes.
The Second affordibility rule is that your entire monthly debt load shouldn't be more than 40% of your gross monthly income. This includes housing costs and other debts, such as car loans,credit card payments or student loan payments. Lenders add up these debts to determine what percentage they are of your gross household monthly income. This figure is your Total Debt Services (TDS) ratio.
Total Monthly Household Gross Income X 0.40 = TDS
Your Maximum Home Price
Your maximum home price that you can afford depends on a number of factors but the most important are your gross household income, your down payment and the mortgage interest rate.
Please use the calcultor at the end of this page to calculate GDS, TDS and Affodibilty. The tables are self explanatory. Please feel free to call me @ 416-414-6875 or 905-275-9400 for any additional information.
Up - Front Costs
Following are the common up front costs that must be accountd before making up the mind to purchase a home.
- Mortgage Loan insurance Fee and Premium
- Appraisal Fee
- Deposit
- Down Payment
- Status Certificate if applicabe
- Home Inspection Fee
- Land Transfer Fee (It is the percentage of the purchase price and may vary)
Ontario Land Transfer Tax Explained
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Ontario Land Transfer Tax
0.5% - on the first $55,000
1.0% - on portion between $55,000 - $250,000
1.5% - on balance over $250,000
2.0% - on anything over $400,000
Qualifying first time buyers receive a $2000 credit |
Toronto Land Transfer Tax *
0.5% - on the first $55,000
1.0% - on portion between $55,000 - $400,000
2.0% - on anything over $400,000
First time buyers are exempt on the first $400,000 |
* When you buy property in Toronto an additional Toronto Land Transfer Tax is paid by the buyer on top of Ontario Land Transfer Tax. In other words, almost the double than anywhere alse.
- Prepaid property taxes or utility bills.
- Property Insurance
- Legal Fee and disbursements
- Title Insurance if applicable.
- Moving Expenses
- Appliances. Check to see what comes with the house, if anything.
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