So you’ll want to do your best to keep your debt under control to maximize your mortgage borrowing power.Īlso don’t forget that your finances will also have to pass the mortgage stress test. car loans, credit card payments, etc.), financial institutions will reduce the amount of mortgage you can qualify for by $100,000. This is where you’ll want to be extra cautious if you’re looking to apply for a mortgage for the first time.įor every $450 of monthly consumer debt obligations under your belt (I.e. However, if your housing costs are 45% or more of your earnings, you run the risk of stretching your budget dangerously thin in other areas, which could lead to increased usage of credit cards and loans as a way to fill the gap in your finances. If you happen to be over that number by 5%, there is no need to stress. Property taxes, condo/strata fees (if applicable).Whether you’re paying rent or have a mortgage, ideally you should be spending no more than 35% of your total income on housing. To assist with determining those portion sizes, here is a guideline as to what percentage of your income pie should be spent in the following areas: HOUSING = 35% One way to do that is to think of your income as a giant pie that needs to be regularly portioned out to your various monthly financial needs and obligations.Īnd here’s the thing-those portions won’t be doled out equally.ĭepending on where you are on the pay grid, or how much pension income you’re earning in retirement-certain needs and obligations will need to get bigger slices (of your income pie) than others. Yet in order for a budget to be successful, you need to determine how to ‘break it down’. But do budgets really make a difference?Ĭonsidering half of the population is on the brink of insolvency, it would be safe to say that budgets have the potential to make a world of difference to anyone and everyone who actually follows them. ![]() ![]() (Reading time: 4:30) 49% of Canadians use a budget to plan their spending.
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