It’s a Personal Decision
While you may qualify for a certain mortgage amount, you should also consider how it will impact your lifestyle and other things that are important to you. Will you be able to maintain your current lifestyle with the mortgage payments you’re considering. Are there changes to your current spending that you can make to be able afford that new home?
Be honest in deciding what you can afford. Look hard at your current lifestyle – how much do you spend on going out to dinner, movies, vacation, etc. Some small changes may impact your lifestyle such as eating at home and watching movies instead of going out. Will you be satisfied with the changes you’ve made?
Future Considerations Too!
It can also be important to think ahead. Where will you be in a few years – kids, new job, etc. How this will affect your future cash flow? Future changes to consider: The impact of family changes will affect cash flow and your ability to meet your monthly financial obligations. For example, the birth of a child can mean less income coming in due to maternity leave, increased expenses with new clothes, furniture for the baby’s room, strollers and more. Look at your employment situation – will you be getting a salary increase soon? Is your spouse/partner going back to work? You may then want to look at stretching yourself now, for the added flexibility later – getting into that home you really want now. Some additional thoughts – if you have never owned a home before think about the additional costs associated with owning a home that will impact your cash flow: Utilities – electricity, water, internet and new furniture.
Think About Balance
You will need to decide if a starter home right for you? Something that will allow you to be a home owner now, understanding that in a few years as your family grows and changes: you may need a larger home. Or do you want to stretch and get that dream home now – and potentially never have to move again. You’ll be living with this decision beyond today so you need to think about balance. Remember you want to be able to sleep at night knowing you can make your payments.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.