How Much House Can You Afford?
Buying a new home here in Calgary is a significant financial investment. You may find that mortgage financing makes the purchase cost of a home easier to manage, allowing you to pay off the purchase on a monthly basis rather than having to make a large up-front cash payment. Below we'll share a couple of brief insights about mortgage financing and a quick mortgage calculator which can assist you in determining just how much house you can afford.
How Your Down Payment Affects Your Mortgage
The 'down payment' is the amount that you'll be required to invest up-front in order to purchase your home. If you're buying a house, condo or townhouse you're required to invest no less than 5 percent of the purchase price as a down payment. For example, if you are looking at a home that is listed at $250,000 you will need to have at least $12,500 in order to qualify for mortgage financing. The more you invest in your down payment, the less you will need to borrow in the form of a mortgage.
How Interest Rates Affect Your Mortgage
'Interest' is the fee that the lender charges you in order to borrow your mortgage. It is typically expressed as an annual rate that is paid on the remaining 'principal' amount that was taken out when you purchased the home. Using the example above, if you placed $50,000 down on the $250,000 home, your principal would be $200,000. If your interest rate was 5% you would pay $10,000 in interest in the first year.
Questions? Don't Hesitate to Contact Us
Do you have any other questions about the mortgage process or how a mortgage can assist you with purchasing a new house or condo here in Calgary? Contact the professional real estate team here at Your Calgary Real Estate at (403) 249-4322 or by email and we'll be happy to assist.
This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate.
Contact us for more information about financing your next real estate purchase.