Determine How Much House Can You Really Afford

Often life catches up to us and we forget how much our hard earned money is actually going towards our home. Before purchasing a home, you should do your research to determine how much home you can really afford. It is best to speak with a qualified financial planner to help you with monthly budgeting needs, as realtors and mortgage brokers may have a bias in your transaction.

Avoid Being House Poor

Any reputable financial professional will assist with creating a budget. Ideally, housing costs should not 36% of your tax income. In certain housing markets, where prices are higher than the national average (i.e Vancouver), some advisors may suggest that total housing costs should not exceed 55%. Many individuals are not aware of the true recurring costs of owning a home; therefore, we have provided a list of common and not so common housing costs.

1.       Mortgage (either weekly, bi-weekly, semi-monthly, monthly)

2.       Strata fees (if you are financing a condo)

3.       Property taxes (best practice is to set aside funds monthly leading up to the annal payment)

4.       Repairs and maintenance: very difficult to budget; however a side savings account for imminent repairs can prevent financial turmoil down the road.

5.       Basic home furnishing: one of the most overlooked monthly budget items.

6.       Renovations: ideally should be paid from savings not credit.

The total of the figures from 1 to 5 should not exceed 55% of your tax income.

Renovations could be more affordable if you hire a professional to do the job right the first time. Choosing a reputable contractor with a solid portfolio and excellent work ethics will ensure that your project is handled in a professional and timely manner. Contact Allegiance Construction to tackle your home renovation needs.