How to quickly find your ideal mortgage payment

When shopping for a new home (and a new mortgage), it's best to work backwards-figure out how much you can afford to spend on your monthly mortgage payment and use that number to determine your ideal housing price point. How do you come up with that monthly number? Well, one way is to go through your last three months' worth of bank statements, figure out what your spending habits are decide how much you could comfortably spend on housing. The other (quicker) option? Try the 40X rule . The 40X rule is simple-and a calculation that's been used by New York City landlords for quite some time. Divide your annual salary by 40, and you'll end up with the approximate monthly payment you should be spending on your mortgage. Fiddling around with a mortgage calculator will help you translate that monthly number into a total mortgage amount-and, combined with your down payment, your housing price point. While this isn't a foolproof method, it will give you a starting point to look for houses in your price range (and avoid disappointment when you find out that the multi-million dollar mansion you had your eye on is actually not in your budget).

The New Mortgage Rules Effective February 15th. 2016

Breaking News:

Today Bill Morneau, Finance Minister, announced some significant changes to mortgages.  Effective Feb 15, 2016 the minimum down payment for house purchases over $500,000 will require a bigger down payment.

Here's how that works:

A purchase price of $800.000 until Feb 15th, 2016 would require a down payment of $40,000.  After Feb 15th the down payment changes to 5% on $500,000 ($25,000) and 10% on the amount over $500,00 (10% x $400,000 = $40,000).  Your new down payment required is $65,000.

This is a dramatic change and deserves to be read between the lines.  The Minister today said he was ensuring  credit worthy borrowers maintained enough equity to protect them. There is also a lot of talk of the US raising borrowing rates next month.   There appears to be a lot of pressure on the government to cool the housing market before it corrects itself.

A market that shuts out first time buyers is not a good thing.  First time buyers are shut out more by the price of housing than down payments.  At this time first time buyers have little hope of getting into the market because of the price and not because of their inability to save money.  They are also affected by the interest rates.

Lets take a look back to the early 1990's.  First time buyers were shut out of the market.  Prices were out of reach and buyers were flocking to the suburbs and small towns in big numbers.  Those lucky people that managed to get into the market soon found they owed more money than their houses were worth.  It would appear the government has not forgotten the lessons of that time.  While they won't out right say there is a correction on the horizons its getting ever more apparent.  The changes today will ensure those buying will have a cushion.


More to come on this for sure.

A simple way to save energy this winter

Now that the weather has gotten chillier, households across Canada are turning up the heat. But are they doing it efficiently?

If you're like most homeowners, you probably haven't combed through the instructions of your high-tech thermostat-but you should. Knowing how to properly take advantage of your thermostat's features could save you a ton of money in energy bills this winter. Read this article  to find out which features you should be paying attention to.

Winterize Your Garage

With the cold winter months fast approaching, there is no better time to reorganize your garage to make room for more important things-like your car!

If you're looking for some inspiration, check out this blog  post from the professional organizers at Tailored Living. It's full of really interesting floor-space-saving ideas and racking configurations (that make storing things like sports equipment and holiday decorations so efficient!)

Which part of your home is in most need of some reorganizing? Let me know-I'd love to hear!

The Secret to Avoiding a Housing Slowdown

We've been hearing about the risks of housing overvaluation in Canada for the last few years. While there’s no way to tell for sure when housing prices will stop increasing, as this article in the Globe puts it, it’s going to happen sometime. Whether it’s a more significant correction, or an extended period of stagnant housing prices, it’s best to prepare now for the inevitable.

This means abiding by the 10-year rule—buying a home that, if necessary, you could live in for the next 10 years. This sounds easier said than done—particularly in Canada’s more expensive housing markets—but, in many cases, it is possible. It might mean buying in a less desirable location, or purchasing a home with renovation potential should it become cramped within the next 10 years. It also means skipping the condo purchase if you’re a first-time buyer who might be starting a family within the next five years, or foregoing that large mansion if you’re going to find yourself with an empty nest in the same timespan.

When abiding by the 10-year rule, you’ll also have to consider your mortgage options as well. Sometimes the traditional 5-year fixed makes sense, but occasionally longer mortgage terms can benefit you as well. If you’re wondering what mortgage option is your best bet over the next decade, feel free to drop me a line and we can find a solution that makes the most sense for you.

Don’t lose money on foreign currency exchanges

When traveling out of the country, how much foreign currency should you bring? And how can you be sure you're getting the best exchange rate – without the hidden fees?

This article in the Globe tackles the topic, offering five money-saving tips for exchanging foreign currencies on vacation. The best tip, in my opinion? Find a credit card that doesn't charge an extra foreign exchange fee – there are a lot of them – and use it for as many purchases as you can. Supplement that with extra cash from the bank (obtained before you head to the airport) and you should have enough for cab fare, tips and cash-only emergencies. 

What is your foreign currency strategy? How much cash do you bring when leaving the country?

4 Ways to Measure your Financial Health

So you finally paid off your credit cards and you have a bit of money in the bank - but are you financially healthy? If you want a true reading of your financial health, you have to look beyond the obvious and dig a little deeper. Here are four numbers that can help you determine where you stand:

Credit Score
In Canada, a Credit Score over 600 is considered "good", while anything over 750 is considered "excellent". To uncover your score, you can purchase an online report from one of Canada's credit bureaus, Equifax or TransUnion.

Retirement Savings
Your retirement nest egg obviously depends on the type of retirement you hope to have. There are plenty of retirement calculators and articles out there to help you determine what your end number should be. Work backwards from there to see if you're on the right track.

Emergency Savings
Anything you put aside in an emergency savings fund is better than nothing, but most experts suggest saving between three and six months' worth of living expenses to safeguard your household against such factors as unemployment, injury or illness.

Net Worth
When you take your assets and subtract your debts, what are you left with? If the answer is "nothing", this is an area to work on!

If, after looking at these numbers, you're lacking in a few areas—that's okay! This exercise is simply to determine where you stand, and help you devise a plan of action for improvement. Sometimes your home can speed up this plan of action. Feel free to give me a call to see how you can use your home to improve your financial health.