Quote:
Originally Posted by Chuck Norris
It depends on the location but if it is local my professional opinion is that you should wait and not buy anything right now.
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Mine too, yet the market is hot right now. I blame uneducated sheep who will be stuck with huge bills in 5 years time when rates have reset.
Quote:
Originally Posted by Chuck Norris
If you still wish to do so, your best bet is to add up your gross income and then figure out all your debts. The banks will not consider anything if your debt ratio is above 40%
So for example, if you gross $10,000 a month the most the bank will let you pay is $4,000 a month.
If your current mortgage is $2,000 a month and you have a car loan (or some kind of loan) for $500 a month, the most you can borrow is based on your payments which would be a max of $1500.
You can run the numbers yourself but that's what the bank will consider.
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The Bank considers that the property will be rented XX% of the time and you'll have to cover 100-XX%. The XX% is based on factors such as city size, vacancy rate, ... so I expect it to be very high in Vancouver. It was 75% in rural Ontario when I was looking at investment properties before I moved.
So in your example, $1500 only has to be 25% of the housing costs, so he could take on $6K of mortgage expense.