A home is an important investment in anyone’s portfolio, but there are some important things to consider before taking the first step toward getting a mortgage.
Remember: mortgages are banks’ number one money-makers, which is why they’re often easy to get — and hard to get out of. To avoid facing a mortgage-induced financial crisis, always follow these three rules:
1. Don’t spend more than you can afford
You should never spend more than 25 per cent of your income on your home. This includes mortgage payments, renovations, parking and any other home-related expenses.
2. Save a solid down payment
A bigger down payment comes with a lot of perks, including lower interest rates, lower monthly payments and, most importantly, more home equity, which safeguards you if the market turns downward.
3. Always choose predictability over variability
Don’t get duped into a low-interest variable mortgage just because it seems cheaper in the short-term. Your initial interest rates might be lower, but they can shoot up at any time. A fixed-rate mortgage is always the best option.
Check out our 2015 Real Estate Roundtable. Low oil and even lower interest rates fuel our liveliest debate ever