Mortgage

That depends on your income, your spending pattern, current interest rates, the value of the property, and your existing financial commitments. Lenders will consider your total future living expenses and loans. Your borrowing capacity is determined as a percentage of your gross income. This can vary from lender to lender, but it is usually around 25% of your gross income. The lender may also include a certain percentage of your partner’s income when determining your gross income. The maximum you can borrow is 80% of the property's assessed liquidation value, or, if it is a new home, 100% of the total construction costs. The liquidation value is the estimated amount the property would probably be sold for at a foreclosure auction. For an existing home, the liquidation value is always lower than the purchase price. Therefore, the lender will ask how much of the purchase price you wish to pay as a down payment. An ENNIA mortgage expert can work out the options for you.
 

In general, when you buy a home, you must have enough of your own funds to cover the costs of moving, furnishing and, if necessary, renovating or upgrading the property. The total of these costs could add up to 10% of the property's purchase price. This is why we always recommend you set aside as some funds in reserve. But this may also mean you may have to borrow 100% of the purchase price. However, you should never borrow more than you can afford considering your income and customary expenses. If you choose a life insurance based mortgage, it may be advantageous to use your own funds to make extra contributions to the life insurance policy that is linked to your mortgage.

Your total available funds is the mortgage amount plus your savings. The property's purchase price must be less than this, because there are additional expenses when you buy a home (usually around 10% of an existing property's purchase price). Divide the total amount of your available funds by 1.1 to get an indication of your purchasing power.
 

Many mortgage consultants only consider the net amount of your mortgage expenses. But, as a homeowner, you will also need to take into account other costs, such as property maintenance costs and insurance premiums. It’s advisable not to make any decisions before you have a complete overview of all the costs involved with buying and owning a property.

You decide for yourself from which lender you want to request an offer from. You can choose to talk to a lender directly or to go through a mortgage consultant. The latter is advantageous because you will be able to choose from different lenders.
 

When buying a home, there are incidental (one time only) costs to be paid in addition to the property's purchase price. These one time only costs are divided into purchase costs and financing costs. Financing costs are deductible on your income taxes, but purchase costs are not. Purchase costs include the fee charged by the real estate agent who has assisted you with purchasing the property and the fees charged by the notary to transfer the property's title to your name (title transfer deed).
The costs associated with financing the purchase of your home include: a handling fee which most lenders charge for setting up a mortgage; the fee charged by the notary for drafting and registering the mortgage deed; and the fee charged by the property assessor who appraises the value of your new home.

When you have finally chosen a property and found a suitable mortgage, you will want to protect your new home from unforeseen events. Effective security measures combined with a mix of well balanced insurance ensures that any financial consequences from unforeseen event will be minimized. When you are buying a home, it is also a good time to adapt your most important insurance policies to your new situation.

A mortgage is a long term commitment, but of course many things could happen along the way. To ensure that your ability to make your mortgage payments will not be seriously affected by any such changes, we have listed some tips below.
If you and your partner are planning a family, there will be necessary changes in terms of your future income and spending patterns. For most couples, expanding their family means a smaller budget remains for mortgage payments. You probably took this into account when you took out your mortgage by for example having opted to include both partners' incomes when determining the mortgage amount. This may be practical as long as there are no children. After all, you can always borrow more. But in the long term, higher mortgage payments become less affordable.
The day when you retire is often known far in advance. When that day arrives, your income will be likely reduced, meaning that your mortgage payment becomes a bigger percentage of your household budget. In addition, you will no longer be able to fully deduct mortgage interest from your income tax. It is wise to align the term and amount of the mortgage to take your income situation after retirement into account.