Home Buyers Guide: Preparing to buy property

Overview

It’s important to carefully consider how much of a down payment to make on your property and how to prepare for obtaining financing. Here are some tips:

Step One: How much can you borrow

You will have to determine how much you can borrow before attempting to purchase your home. Your mortgage lender will take four things into account:

• Income, referring to your salary, investment interest, commissions and other verifiable sources of income.
• Debt-Income ratio, which is combined debt and housing expenses which should not exceed 50% of your monthly income.
• Property appraisal, which is a professional assessment of the property to ensure its market value is sufficient collateral.
• Credit history, which refers to your past debt record on meeting payments.

Step Two: How much can you put down

Your down payment is critical to your mortgage. It affects:

• The lender’s decision
• Your loan amount
• The Mortgage type
• The size of your monthly payments
• Your mortgage interest rate
• The cash you have available for other moving/furnishing costs