Understanding the concept of financing is important when embarking on the journey to buy a home. Like many things in life, planning ahead is the key to success. Therefore, knowing the price range you can afford before you start shopping is essential. Here are a few things to keep in mind:
- Deposit: This is the initial payment for purchasing a property. Banks prefer higher deposits however anything over 10% of the homes total cost is acceptable. The higher your deposit, the lower your mortgage repayments will be. It also plays a role in your interest rates.
- Determining Your Budget: Your budget is determined by your monthly mortgage payment, down payment, and borrowing period. By analysing your income, debts, and expenses, you can estimate the price range for homes you can realistically afford.
- Pre-Approval: Before you start searching for a home, pre-approval is a must. Majority of buyers achieve conditional approval, which helps you determine your borrowing power.