OAKVILLE NEIGHBOURHOODS AND HOME PRICES
OAKVILLE NEIGHBOURHOODS AND HOME PRICES
Understanding How Much Mortgage You Can Afford
Know your Gross Debt Service ratio (GDS) and your Total Debt Service ratio (TDS) before you go home shopping. This will help you narrow down the search parameters. Here’s what this alphabet soup means:
GDS ratio: This is the maximum percentage of your income most lenders think should be allocated to cover the costs of running a home,
mortgage payments, taxes, utilities and any condo fees:
- Calculate 32% of your total household income before taxes · For example, $5,000./month x 32% = $1,600.
TDS ratio: This is the maximum percentage of your before tax income that most lenders think should be allocated to cover housing cost plus all other monthly debt payments:
- Calculate 40% of your total household income before taxes and subtract all monthly debt payments · For example, $5,000./month x 40% = $2,000. - $500. (car and student loan payments) = $1,500.
The lender will use the lower of the two amounts, GDS or TDS, to help determine how much of your income may be used towards housing related costs, including your mortgage payment. This obviously impacts how much the lender will agree to lend you.
There are GDS and TDS calculators in this section of CMHC's "Are You Financially Ready?"
You will also want to understand about the other costs included in these calculations: Property Taxes: Normally 1% to 1.5% of the value of the home you buy. For more info: see the tax department sections of the Town of Oakville, Town Milton or City of Burlington websites.
Heating Costs: This varies by home, the type of heating equipment and users, obviously. To get rough estimates, talk to your friends who have similar lifestyles and who live in homes similar to the ones that interest you. There is lots of interesting info on line - check out the EnergyShop site.
Condo Fees: This depends on building age and amenities and unit size. I can give you the figures for these for various locations in Oakville, Milton or Burlington.
GDS ratio: This is the maximum percentage of your income most lenders think should be allocated to cover the costs of running a home,
mortgage payments, taxes, utilities and any condo fees: - Calculate 32% of your total household income before taxes · For example, $5,000./month x 32% = $1,600.
TDS ratio: This is the maximum percentage of your before tax income that most lenders think should be allocated to cover housing cost plus all other monthly debt payments:
- Calculate 40% of your total household income before taxes and subtract all monthly debt payments · For example, $5,000./month x 40% = $2,000. - $500. (car and student loan payments) = $1,500.
The lender will use the lower of the two amounts, GDS or TDS, to help determine how much of your income may be used towards housing related costs, including your mortgage payment. This obviously impacts how much the lender will agree to lend you.
There are GDS and TDS calculators in this section of CMHC's "Are You Financially Ready?"
You will also want to understand about the other costs included in these calculations: Property Taxes: Normally 1% to 1.5% of the value of the home you buy. For more info: see the tax department sections of the Town of Oakville, Town Milton or City of Burlington websites.
Heating Costs: This varies by home, the type of heating equipment and users, obviously. To get rough estimates, talk to your friends who have similar lifestyles and who live in homes similar to the ones that interest you. There is lots of interesting info on line - check out the EnergyShop site.
Condo Fees: This depends on building age and amenities and unit size. I can give you the figures for these for various locations in Oakville, Milton or Burlington.
