With today’s long-term amortizations, interest-only loans, and other unconventional mortgages, it’s getting easier and easier to buy more house than you should.
This CBC article reiterates an important rule of thumb: “no more than 32 per cent of your gross income should go toward paying principle, interest and taxes on a home.” It also suggests banking three to six months of mortgage payments in case of hardship.
How much mortgage is too much? BMO’s Cid Palacio says that if you gross $70,000 a year, $1,866 a month is the most you should spend on a mortgage. That equates to a house of about $250,000 to $300,000.
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