What is the State of My Finances?
To determine what price range you can target for your home, you must determine the state of your personal finances. Once that’s done, you will have an idea of the highest mortgage payment you can afford without stress and without breaking the bank. It may be a little technical, but it's well worth the effort!
Make the following calculations to determine:
- the state of your financial situation;
- your borrowing power.
Don't have time for all this math? Call one of our advisors at 1-877-522-3863 or complete a mortgage preapproval request online to find out what you can afford to pay for your home.
In the meantime, try this easy formula for an idea of the highest home price you can afford: The instant home estimate.
| Description | Amount | |
|---|---|---|
| 1. | Add your and your partner's gross annual income together (if applicable) | $___________ + $___________ = $___________ |
| 2. | Multiply this amount by 2 for an estimate of your future home price1. | x 2 = $___________ |
The State of My Financial Situation
You work hard for your money, but are you getting the biggest bang for your buck? Could you be saving more?
By using our Calculate your Budget calculator, you’ll be in a better position to answer these questions while getting a fairly accurate idea of the monthly mortgage payments you can afford. If ever the result sends you into a state of shock, chin up—we can help! Where there’s a will, there’s a way.
My Borrowing Power
To determine the mortgage value you can afford, your advisor will:
- assess your credit and check your professional history;
- calculate the gross debt service ratio (GDS), in other words, your housing costs. The total should not be more than 35%2 of your gross monthly income;
- calculate the total debt service ratio (TDS), in other words, your current obligations. The housing costs (GDS) are added to all the current payments you make toward your financial obligations, such as car loans, student loans, RRSP contributions and your outstanding credit card and line of credit balances. These expenses should not total more than 42%2 of your gross monthly income.
Make an appointment with an advisor by calling 1-877-522-3863 and find out your borrowing power, or complete our mortgage preapproval request right away.
In a hurry to know your ratios? Figure them out yourself using our tables or use our Mortgage Borrowing Power Calculator.
HINT: Be selective with your credit.
Do you collect credit cards? This is not an asset when buying a home, far from it. The more available credit you have, the more your net worth drops. At the end of the line, this compromises your borrowing power.
Clean house! Keep only one card or the few cards that you really use. The less credit cards you have the more you’ll gain in credit for a mortgage loan, which can quickly add up to money in the bank for your first home.
Determine how much you can put down >>>
Legal notice
1. You can multiply by 2.5 if you don’t have a lot of financial obligations or if you can come up with a large down payment.
2. The ratios can be up to 39% and 44% respectively under certain conditions. Additional information and documentation may be requested at Laurentian Bank’s sole discretion for the approval of the loan. Laurentian Bank reserves the right to restrict approvals on applications that do not meet the Office of the Superintendent of Financial Institutions’ (OSFI) defined Loan to Income (LTI) ratio.
