The first question that arises when the dream of becoming a home owner is born: “Can I afford it?” The financial planner, offers the tips to help you get from dream to reality.Consider all of your debts, not just the amount of the mortgage to determine your financial capacity.
People’s first reflex is often to calculate their income relative to the projected amount of the mortgage, but the right way to calculate your borrowing capacity is to make a budget, including all of the expected cash outflows, starting with your debts. Here are the real estate guides for you now.
A maximum of 32% of your gross household income should be spent on housing costs:
- The amount of the mortgage
- Municipal and school taxes
- Energy costs (heating and electricity)
- Co-ownership fees (if applicable)
A maximum of 40% of your gross household income should be spent on paying off your debts:
- The amount of costs related to housing
- The amount due for your vehicle (if applicable)
- The monthly payments to be paid on your card and your line of credit
- Personal loans
- Other payments, such as support payments
Examine your lifestyle
The debt ratio is used as a benchmark to calculate the maximum borrowing capacity, but it does not determine everything: “The ratio only considers what you earn, but it does not take into account what you spend. Some people with a high debt ratio pay for their homes without problems while others fail to make ends meet. If eating out often in restaurants is essential to your happiness, it must be taken into account in the calculation.
Plan for savings before and after buying the house
It’s probably the most important transaction in your life, so it’s getting ready. It is essential to set aside money not only for the down payment, but also to cover all the expenses of the house.
Costs to expect related to the purchase of a house:
Start-up costs such as notary fees, property transfer rights (“welcome tax”), account adjustment costs, moving, etc.
- Purchase of equipment and materials for routine house and grounds maintenance
- Breakage repairs
- Changing doors and windows
- Roof maintenance
- Additional energy costs (think of the freezing winter we just experienced)
- Home Insurance
- Possible purchase of a new car or furnishings
Once the house is purchased, many people have the reflex of wanting to favor the accelerated repayment of their mortgage, while neglecting savings. “Without an emergency fund, you will have to go into debt for every problem that occurs in the house. Remember that the mortgage interest rate is more advantageous than that of credit cards. »Provide a cushion for the unexpected, saving systematically with automatic payments into a dedicated account for an emergency fund, which can eventually be used to make a down payment on your mortgage.
In the end, the best advice is still to surround yourself with a counselor, to whom you will be comfortable asking all your questions and who will be able to give you the right time.