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How to calculate your mortgage Payments?
January 7, 2022 | Posted by: Sam Samarajeeva
If you're looking to take out a mortgage sometime soon, you most certainly want to know what your regular mortgage payments would look like before committing to anything
The easiest way to do this is to use a mortgage payment calculator.
The mortgage payment calculator helps calculate your monthly payment and your amortization plan throughout the life of your loan
So, if you want to buy a house, you may use a payment calculator to simulate down payments and amortization periods and compare variable and fixed mortgage rates. It also figures up your mortgage default insurance and land transfer tax
Key variables to estimate mortgage payments
- Mortgage principal amount: It is the purchase price minus the down payment.
- Term and Interest rate: Select a term and interest rate that best meets your requirements and timeframe.
- Amortization period: Determine how long it will take you to pay off your mortgage in full.
- Payment frequency: Choose how frequently you would want to make mortgage payments.
Getting approved for a mortgage
Do you have any loans, such as a vehicle loan or a student loan? Before you start the application process, here are some things to remember
- Your ability to repay. 'Is your income sufficient to meet the new mortgage payment as well as all of your other monthly expenses?'. Lenders will use your debt-to-income ratio to determine if your application will get approved. Most of them prefer a debt-to-income ratio of 44% or less, but the optimal ratio for you is the one you can easily manage.
- Your likelihood to repay. Your payment history and credit score will be used by lenders to determine your chances of making future payments.
- Your home's value. The underwriter thoroughly examines the worth of the house you’re buying to ensure it meets the purchase price. This will also assist them in determining whether the loan-to-value ratio (LTV) is within the parameters of the loan program. For 1st time home buyers, the minimum down payment required is 5% of the purchase price. Most lenders need a loan-to-value ratio of no more than 80% to qualify for a conventional loan.
With Toronto Mortgage Exchange, we will present you with different mortgage options and guide you to select the best opportunity to save money. Talk to us today!
