Mortgage

[Golf IV]

So if I apply for a mortgage will the monthly payment be based on my salary? Like say I make $50,000 will they limit how high my monthly payment will be thus limiting the mortgage amount? Or can you say I am willing to pay x amount.

If there is a limit whats the calculation roughly? ie payment no bigger then 1/2 net salary

TIA :thumbsup:

[93mr2gt]

go to bmo.ca they have a mortgage calculator there....if you can do about 30% downpayment then most places will most likely qualify you

[Golf IV]

Ya I tried those calculators and for that kind of income they give you a monthly payment of something like $600. But what if I want monthly payments of $1200 to pay it off faster and live like a bum? Will they say something like the monthly payment is too much of your net pay?

[Weapon_R]

Your income (and credit and history) will set the total amount that a bank will lend you. If your payments are (example) 600/month, most banks will allow you to double up this payment. Others will have an option for a yearly cash lump sum or an option to increase payments by up to 20%. Just depends on the lender.

[$lick_rYz]

I think they look at your GDSR ( gross debt service ratio) and TDSR (Total Debt Service Ratio)

[skandalouz_08]

Banks do look at the GDSR and TDSR and tend not to lend any more than 40 % based on your total income, and will go up to 44% as a maximum.

[ZorroAMG]

^Not necessarily. I've lent upto 75% of TDSR. Exceptions and extreme wealth can change that...

Most people here though the 32/40 will apply...not even 44%

[skandalouz_08]

Originally posted by ZorroAMG
^Not necessarily. I've lent upto 75% of TDSR. Exceptions and extreme wealth can change that...

Most people here though the 32/40 will apply...not even 44%

Yes exceptions can be made on rare occasions and people with extreme wealth. I was just going on the average though, its not everyday people come in with the best credit rating and extreme wealth. and what you said is true, the 32/40 is more average, but lately I've been doing more 40/44

[ZorroAMG]

Nice work then, I've been out of the Mortgage business since the end of '04.

[Tik-Tok]

Originally posted by Golf IV
Ya I tried those calculators and for that kind of income they give you a monthly payment of something like $600. But what if I want monthly payments of $1200 to pay it off faster and live like a bum? Will they say something like the monthly payment is too much of your net pay?

Yes they will, they will only allow you the initial mortgage based on your salary and debt ratio's, if after you get it, you opt to double your payments and live like a bum, that's your decision.

[leec001]

Most bank will be u double pay every month and extra payment => up to 15% of the amount of your loan every year.

Let say your mortgage is $150000, your monthy payment is $600. You can double pay it and still can pay (15%) $15300 extra toward your mortgage.

[Rav4Guy]

Originally posted by Golf IV
So if I apply for a mortgage will the monthly payment be based on my salary? Like say I make $50,000 will they limit how high my monthly payment will be thus limiting the mortgage amount? Or can you say I am willing to pay x amount.

If there is a limit whats the calculation roughly? ie payment no bigger then 1/2 net salary

TIA :thumbsup:

have amortization at 15 years instead of the usual 25. That'll bump up the monthly payments.

[Golf IV]

Originally posted by Tik-Tok


Yes they will, they will only allow you the initial mortgage based on your salary and debt ratio's, if after you get it, you opt to double your payments and live like a bum, that's your decision.

I see.......so your monthly payments have nothing to do with the mortgage amount. I was hoping that by increasing the monthly payments I would get a higher initial amount. I'm not worried about paying it off faster I just want a bigger amount so I can get something nice in this crazy market.

[Rav4Guy]

Originally posted by Golf IV


I see.......so your monthly payments have nothing to do with the mortgage amount. I was hoping that by increasing the monthly payments I would get a higher initial amount. I'm not worried about paying it off faster I just want a bigger amount so I can get something nice in this crazy market.

In a way it does....

Higher payments = high salary which in turn means it'll lower your TDS ratio which in turn means you can get a bigger mortgage.

Mortgage amount will adversly affect your basic monthly payments.

[in*10*se]

Originally posted by Golf IV


I see.......so your monthly payments have nothing to do with the mortgage amount. I was hoping that by increasing the monthly payments I would get a higher initial amount. I'm not worried about paying it off faster I just want a bigger amount so I can get something nice in this crazy market.

just increase your amortization rate from 25 years to 35-40 years.

by increasing your amortization rate, you will end up paying more interest, but it will qualify you for a higher mortgage amount and have smaller mortgage payments. (once again, NOTE you are paying HUGE interest amounts)

the loop hole through this is that you don't just pay minimum mortgage balance and you pay more towards your principal. ie. if your payment is like 1000 a month, you'll put 1200 towards your mortgage instead. That way you're paying down your principal, and not just paying interest. by jacking your payments higher than what is necessary, you end up cutting your amortization rate from 40 yrs to almost an equivalent to 25 yr. so in the longer run it doesn't matter. the whole point is to qualify for more money.

[pinoyhero]

Originally posted by Weapon_R
Your income (and credit and history) will set the total amount that a bank will lend you. If your payments are (example) 600/month, most banks will allow you to double up this payment. Others will have an option for a yearly cash lump sum or an option to increase payments by up to 20%. Just depends on the lender.

You can also take a portion of your loan as a lineof credit rather than a mortgage which bascialy works like a low interest credit card, pay the interest only and as much of the premium as you want along the way. Great for flexibility dangerous if your not disciplined.