Amortization schedules, 3.24 per cent five-year, closed rate, bi-weekly payments… you might know all these mortgage terms by now, but have you sat down and figured out how much condo or house your money will buy?
With the help of our mortgage calculator, it’s easy to figure out! We’re going to go through a little exercise using a five-year mortgage rate as an example. We’re choosing that term because about 90 per cent of our first-time buyer ‘Clients For Life’ opt for it. They tend to enjoy the added security of knowing what their mortgage rate will be for five years.
We’re also going to base the example on a 25-year amortization schedule, which means that it would take 25 years to pay off your mortgage. This is also the most common choice among our “first-timers.”
We’ll have to pick a rate for example purposes, but you can check on current rates on the mortgage rates page at YourMortgageWatch.ca. Keep in mind that we have ties with mortgage professionals who routinely shave an entire percentage point or more from the bank’s posted rate for our ‘Clients For Life.’ If you’re a good negotiator, you may be able to negotiate this yourself with your branch manager.
We’re going to choose a five-year rate of 3.24 % for our example.
Well, now that we’ve established the rate and the amortization, let’s look at different mortgage amounts and what they cost monthly. A $100,000 mortgage would cost you… drum roll please… $485 a month in principal and interest payments (a fancy way of saying the WHOLE mortgage payment.)
Did you expect that figure to be much, much higher? Sometimes our buyers are shocked to learn just how far their money will go. Perhaps some of you have heard horror stories from leading-edge Baby Boomers who paid 16, 17 or 18 per cent for mortgages in the early ‘80s.
For argument’s sake, a $100,000 mortgage at 17 per cent costs $1,437.80 a month. That number is even more shocking when you compare it to the monthly cost for a $400,000 mortgage at today’s available rate—$1,940.
To add yet another bit of perspective to these figures, for many of our first-time buyers, that mortgage payment of $1,940 monthly is not much more than the rent that they already pay -- and sometimes it’s less. Is it less than what you pay?
We don’t want to mislead you, though. You must still add expenses such as realty taxes, utilities, condo maintenance fees, insurance and the like to your monthly mortgage payment when you buy your own home, but you’re also building equity. And you don’t have to face yearly rent increases!
If what you’ve just read intrigues you and you’d like to know more about what you can and can’t afford, you can ask us about our free mortgage analysis—connect with us online or by phone and we will get back to you about which mortgage suits your needs best.
Get your free Mortgage Consultation analysis by calling George Christopoulos at 416-721-9299 Extension 221 OR online at GeorgeChristopoulos.ca/how-to-apply-mortgage.
You can call us any time directly with your mortgage questions, or you can drop him an email to George@YourMortgageWatch.ca.
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Here are 5 proven ways to move safely and smartly towards your real estate buying goal...
- Download a free copy of my Ultimate Home Buyer’s Guide book
- Get a custom listings search set up for you and receive targeted listings daily
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- Set up a step-by-step plan with the best ways to get to your home buying goal
Our first-time and move-up buyers have told us that being able to meet with us on a casual basis as early in the process as possible, even if their purchase date was 6-12 months away, really worked the best for them.
To arrange your no-obligation Starbucks Strategy Session, click here.
- Join us for a Market Experience Tour - pick your favourite neighbourhoods and price range
The Market Experience Tour is a great way for you to figure out which neighbourhoods and condo buildings are right for you, and you’ll also get a good sense of what’s available in your price range.
Pick the date and time you like to go on your Tour.
- Don’t start your home buying experience on the wrong foot - Meet for a Buyer Consultation first!!
Don’t make the same mistake. Let’s set a time to meet and go over how the complete home buying process works, find out what your likes and dislikes are and what pitfalls you’ll want to avoid, before you seriously start looking for a house or condominium.
This is the best 90 minutes of time you’ll ever spend - set up your private Buyer Consultation.