8 questions Canadians should ask before taking the plunge When you factor in the costs of repair, maintenance and other expenses associated with owning a home, Toronto based financial planner Shannon Simmons argues thatrenting and putting saved money into another investment such as a stock portfolio could earn more in the long run.
Simmons gives new clients a questionnaire asking where they see themselves in 10 years. Many answer "buying a house." Based on advice from financial planners both independent and those employed by banks Global News has compiled a list of questions (and some context) to help you decide whether buying or renting is coach outlet handbags 360 the right move for you. "If this is the property of your dreams and it's a really good buy, and you don't have the full 20 per cent down," says Royal Bank of Canada's Rachel Wihby, it may make sense to pay the mortgage loan insurance charged to anyone who doesn't put 20 per cent or more down on the home. But "the less you put down, the higher the amount that you're actually being charged," Simmons said. That could mean you end up paying an additional $10,000 or more. 2) Do you have another 1.5 5 per cent saved for closing costs? First time home buyers don't have to pay realtor fees, but there's a number of other closing costs that need to be taken into account. Depending where you live, land transfer taxes can carry a "significant" price tag, said Farhaneh Haque, director of mortgage advice for TD Canada Trust. "Lawyer fees, seller/buyer property tax adjustment, appraisal fees, home inspection fees, even just your moving costs," Haque said. David Stafford, Scotiabank's managing director of real estate secured lending, added fire and loss insurance to the list, suggesting $50 $100 per month as a ballpark figure. Stafford also stressed the value of a building inspection, particularly for first time home buyers, who may be easily impressed by granite countertops and hardwood floors but miss such other details as an old furnace, a leaky roof, or electrical wiring that's in coach outlet handbags philippines need of repair. "Given you're contemplating a multi hundred thousand dollar purchase, a building inspection for a couple hundred dollars isn't a bad idea." READ MORE: Why this Calgary tenant has no plans to buy 3) Can you keep debt servicing below 40 per cent of your income? Your total debt service ratio measures the percentage of your gross annual income needed to cover housing payments (principal, interest, property taxes and heat, known as "PITH") plus registered debts like car loans, personal loans and credit cards if applicable. Simmons says this 40 per cent rule is "specifically to please the bank" and is the general eligibility criteria when applying for your mortgage at most financial institutions. So coach outlet stores miami dolphin mall if you add it all up, housing payments and other debts should be between 35 and 40 per cent of your gross annual income. 4) Are your monthly fixed costs at 50 60 per cent of your after tax income? These "fixed costs" include housing and transportation, groceries, toiletries, and "everything you have to pay every month whether you like it or not," Simmons said. "When the money hits your bank account, if more than 60 per cent is tied up in things that you can't get out of every single month, then you have no room after that for spending money which is not a fixed cost things like going out for dinner, going out with friends, weddings, anything else that's not just a bill." Keeping this ratio under control ensures you have enough money left over to keep saving, and avoid becoming "house poor.
" "Once you buy a house, it's not like retirement's done; you still have to save for other things," Simmons added. "You also want to make sure coach outlet sale tanger that you have enough cash flow every single month that you don't have to go into credit card debt and that's what I see: house broke, all the time." READ MORE: Ditching a Vancouver condo for a Coquitlam townhouse 5) Can you save 1 2 per cent of your income in a "housing maintenance fee" each year? The top mistake Canadian homebuyers make? Underestimating "significant renovations needed to the property," according to a recent RBC poll.
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