Getting Started: Buying A House

In the “Buying A House” section we want to clarify your goals around your future home purchase. This could be the purchase of your first home, a future upsize to a larger home, or a downsize to a smaller home in retirement.

When buying a home there are three main things we want to map out…

  1. Maximum affordability: What mortgage could you qualify for?
  2. Goals for home purchase: The purchase price, the down payment, and the timing?
  3. Mortgage insurance: Will mortgage insurance apply? How much might it cost?
Let’s quickly go through each section…

Maximum Affordability Estimate

Starting on the very left with Mortgage Affordability its important to highlight that the mortgage affordability calculation is an estimate only, each financial institution has slightly different criteria for mortgage affordability and maximum mortgage. In general, a mortgage affordability estimate takes into account your gross household income, certain monthly expenses, and mortgage rates. Fill in your details to get an estimate of how much mortgage you could qualify for. This is an estimate only and we recommend speaking with an independent mortgage broker to get a more precise idea of how much you may qualify for.

Down Payment Goal And Mortgage Payments

In the middle we have questions about your future home purchase and down payment help us understand your goals. Depending on the value of your ideal home purchase a certain minimum down payment is required. Estimated closing cost must be entered manually and is the total of the estimated mortgage insurance premiums, estimated of land transfer tax, and estimated closing costs like lawyer fees and moving costs for example.

A little further down, the current amount you have for down payment savings should be entered, and along with the target purchase date this will help us calculate how much should be saved each month to reach your home purchase goal.

Lastly, at the very bottom, mortgage payments are an estimate of your monthly mortgage payments based on the length of your mortgage in years, also known as amortization, which is typically 25 years or 30 years, plus your mortgage rate.

Mortgage Insurance Estimate

On the right we have the Mortgage Insurance Estimate, this is applicable when your down payment is below 20%. The mortgage premium and the sales tax should both be added to your closing costs back in the middle section, if you have not done so already.

These values will then be used in the Projections section to help map out your future home purchase. In the Projections section, the closing costs will be considered an “other” expense in the year of purchase and will be added automatically. The purchase price will automatically be increased by inflation until we reach the target purchase date at which point the home is purchased within the plan and added as an asset plus a mortgage debt is also added based on the target down payment versus the target purchase price.

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