Whether this is your first home or third, really understanding your mortgage and how it works is crucial. After all, it'll probably be the biggest loan of your life.
What is a Mortgage?
In the most basic sense a mortgage is a loan to buy a property. The process of securing a mortgage requires lender approval based on your income, credit rating and other debt.
Understanding your fixed costs
Before you decide what you can, or should, spend on a mortgage it is important to take stock of your habits and your true fixed costs. Be honest with yourself when putting together your household budget, if you are going to be miserable without your Timmies or Starbucks, then add that as a fixed cost to your other debt payments (car loans/lease, student loan etc).
How much can you afford?
The Canadian Housing & Mortgage Corporation (CMHC) states that your monthly housing costs should be less then 32% of your gross monthly income. These are considered to be your Principle and Interest (of your mortgage payments - also referred to as a PITH test), property tax and utility bills.
Get a Mortgage you can afford
Once you have passed the PITH test, the second check of what you can afford mortgage-wise is that your entire monthly debt load (car payment, credit card debt, student loans etc) should be less then 40% of your gross monthly income. It is easy to find reliable mortgage affordability calculators online through various lenders, or even the CMHC to assist you in figuring this out.
How you want to pay off your mortgage
Once you have your mortgage approval you have to decide on the "terms"of the mortgage. Interest rate, payment schedule (month, twice per month, every two weeks or weekly) and amortization period (the amount of time you have selected to pay the mortgage back - often between 15-25years).
Picking the right interest rate
The interest rate at which you select to pay off you mortgage varies from fixed (the rate will not change for the entire term of the mortgage and is generally a bit higher but more stable) to variable (the interest rate can fluctuate with the current state of the market). You have to select the one that makes the most sense to you.
There are many resources out there to help make the process of owning a home a smooth one.
10 GREAT REASONS TO BUY A HOME IN MILTON
The next time you are looking to buy a home in the GTA, consider Canada's fastest growing town, Milton!
1. A wide selection of homes for sale including detached, semi-detached, executive homes, condos and townhouses.
2. Strong re-sale value in sought after safe, family oriented community.
3. 35 minutes from Toronto with easy access to highways 401, 407 ETR, QEW and GO train service.
4. Charming blend of Town & Country atmosphere in the embracing shadow of the beautiful Niagara Escarpment.
5. Many established and modern new schools.
6. A true Canadian mosaic, rich in diversity and culture.
7. An abundance of amenities including health care, small and major retail shopping, acclaimed restaurants, libraries, Centre for Arts, theater, religious & financial institutions, residence for Seniors, public transportation, parks and much more.
8. Leisure and Sports including Kelso Lake, Glen Eden Skiing, Milton Sports and Leisure Centres, endless walking, hiking and cycling on scenic trails, rock climbing, fishing, swimming, family farms, town fairs, youth / adult sports leagues and a vast list of other enoyable activities.
9. Strong Municipal Services and Government focused on a thriving diversification of family, community, health care, education and well planned economic growth combined with a steadfast dedication to conservation and preservation of the environment.
10. Reasonable Municipal Tax and Utilities.
History of Milton
The Town of Milton is located in the heart of Southern Ontario and thrives in the shadow of the gorgeous Niagara Escarpment. Milton boasts winding scenic trails, great skiing at Glen Eden, seemingly endless paved bicycle paths and awesome outdoor tourist attractions. The area which is now Milton was first settled in the early 1800's by the Martin family from Newcastle England. Jasper Martin quickly realized that his 100 acre plot of land had Sixteen Mile Creek running through it and proceeded to build a grist mill on the creek, with a pond to harness the power of the water. Over a period of 17 years, the mill became the centre of a population base that grew to about 100 people. During this period, the town was referred to as Martin's Mills. The title then changed in 1837 to Mill Town before finally becoming Milton shortly thereafter. In 1857, Milton was incorporated as a town and was chosen as the county seat for the Halton District. Over the years, Milton has expanded it's borders by encompassing former sections of Oakville and Burlington, along with the addition in recent years, of parts of the Niagara Escarpment. Modern day Milton has received a lot of publicity and with the release of the 2006 Census, Milton was declared the fastest growing community in Canada. In 2008, Milton's population had grown to 72,500 with no signs of slowing down. Milton was built on the hard work and determination of it's early settlers and has grown into a dynamic, ever expanding community, that also cherishes the idea of environmental and historical conservation.