Can I Afford to Buy a Million Dollar Home? Ask Your Mortgage Broker in Ontario
By : Mits Kantaria
There was a time when a million dollars would set you up for life. With inflation over the years, a million dollars isn’t worth quite as much as it once was, but it’s still a significant amount of money.
In some parts of Ontario, a million dollars is close to the average home price, so the value of your money is impacted by where you live and work. Are you one of the people who can afford a million dollar home? If you aren’t sure, then your mortgage broker in Ontario can help you find out.
How Much Do You Need to Earn to Afford a Million Dollar Home?
Talk to any reliable mortgage broker in Ontario and they will tell you that you’ll need a yearly income of at least $175,000 before you can start thinking about buying a million dollar home with the best mortgage rates in Ontario.
In addition, you’ll need a down payment of at least $200,000 before banks and private money lenders will consider your application for a mortgage.
Before Talking to a Mortgage Broker in Ontario…
Inflation devalues money over time. If you’ve been thinking about buying a million dollar home in recent years, your mortgage broker in Ontario will tell you that the real value of a million dollars has changed significantly.
If we look back to a million dollars in 1992, it would have the same purchasing power as $1,972,402 today. So, your dream home as a child or teenager is going to be a lot more expensive on paper today.
Securing a Million Dollar Mortgage with Banks and Private Money Lenders
Your existing debt, your income, and your down payment will be closely considered before banks or private money lenders will approve you for a million dollar mortgage.
- Down Payment – Your mortgage broker in Ontario will advise that any down payment below 20% is considered a high-ratio mortgage. You’ll pay more for insurance, and you might not get the best mortgage rates in Ontario. You should have at least 20% in savings before even thinking about buying a million dollar home, so, you’ll need at least $200,000 and the remainder of the home will be financed through a mortgage.
- Debt Ratio – Your debt service ratio is important when borrowing money from banks or private money lenders. Ideally, yours should be below 32% to get the best mortgage rates in Ontario. You can calculate your debt service ratio with the help of an experienced mortgage broker in Ontario. Most people with a small amount of debt should fall within the ideal range with an annual income above $175,000.
Affordability is the most important factor here. Banks and private money lenders will want to see that you can afford to make repayments while covering your cost of living, existing debt, and any unplanned expenses like taxes, fees, home maintenance, etc.
If your income only just supports repayments, then you will have difficulty finding the best mortgage rates in Ontario. You should also consider some other factors even when you can afford the repayments.
- Your debt ratio won’t consider saving for retirement. You should save at least 10% of your yearly income to secure your future.
- Interest rates are likely to increase as the economy expands, so what you consider to be affordable today might not be in a few months or years.
- Unexpected life events like a serious illness, having a child, or changing jobs could drastically affect the affordability of a million dollar mortgage.
Ultimately, your mortgage repayments should be affordable today, with some breathing room so that you aren’t caught off guard by the unexpected.
Will You Get the Best Mortgage Rates in Ontario for a Million Dollar Home?
The best mortgage rates in Ontario sit close to 2.5% today, but they aren’t offered to every borrower. Working with a mortgage broker in Ontario will increase the likelihood of receiving offers from money lenders with the best mortgage rates in Ontario.
Higher income, a down payment above 20%, and a low debt ratio can all help you to get the best mortgage rates in Ontario for a million dollar home. A mortgage broker works for you and will engage with the market to find the best possible mortgage. Your mortgage broker in Ontario will also help you to calculate affordability and determine exactly how much you can borrow.
If you have the income and have kept your debts to a minimum, then purchasing a million dollar home could be the next step in life’s big adventure. Although the investment is sizable, the return can be significant especially considering appreciating home values in and around Ontario’s major urban centres.
Mortgage Capital Investment is your trusted mortgage broker in Ontario. Get the best advice, explore more options with offers from private money lenders, and get the mortgage that makes sense for your needs today and your long-term financial goals. We’re ready to begin with your consultation.
Lowest Residential Mortgage Rates in Canada*
|Term||OUR RATE||Bank Rate|
|3 Year Fixed/ 25 yrs||3.79%||4.19%|
|3 Year Variable/ 25 yrs||2.10% Promo||2.86%|
|5 Year Fixed/ 25 yrs||3.94%||4.24%|
|5 Year Variable/ 25 yrs||2.20% Promo||2.75%|
|5 Year Fixed/ 30 yrs||4.49% Promo||4.99%|
|5 Year Variable/30y||2.70%||3.40%|
Updated: May 16, 2022
* Current promotion rates may provide an additional 0.05% discount or may be anytime discontinued at the Lender discretion . Rates may vary between geographic regions and the posted rates on this website may not be available in your area. Please contact our MCI office for more details and current promotions.
LOWEST REGULAR RATES IN CANADA* * Current promotion rates may provide an additional 0.10% discount. Rates may vary between geographic regions and the posted rates on this website may not be available in your area. Please contact our MCI office for more details and current promotions.