"What's the maximum purchase price I qualify for, all while putting down the least amount of money possible?"
Generally, millennials all tend to have the same approach when buying real estate and getting a mortgage. They want to know the maximum purchase price they will qualify for, all while putting down the least amount of money possible. And honestly, it’s not entirely a bad approach, it’s a reality that for many often makes sense.
Based on the median after-tax income millennials in Canada are earning, which is $46,000, we will assume that the newly married millennial couple earn a combined household income of $92,000
With an annual household income of $92,000 the maximum purchase price they can qualify for, all while putting down the least amount of money possible, is $450,000. The minimum down payment required in this scenario would be $22,500 which is equal to 5% of the purchase price.
Take a look at the breakdown of this mortgage;
5% Down | 95% LTV (Loan-to-value)Â
Purchase Price -Â $450,000
Down Payment -Â $22,500 (5%)
Loan to Value -Â 95% (High-Ratio Insured Mortgage)
Mortgage Amount - $427,500
Mortgage Default Insurance -Â $17,100 (4% of mortgage balance)
Total Mortgage Amount -Â $444,600 (Including Mortgage Default Insurance)
Amortization - 25 years (No 30-year amortization for insured mortgages)
Interest Rate - 1.35% (Variable Rate)
Monthly Mortgage Payment - $1,746 (Principal & Interest)
The ULTIMATE lesson, not only today but every single day, is universal across all businesses...
KNOW YOUR CLIENT.
