Pay your mortgage and save too? Here's a formula to build your wealth
Maybe the mortgage you need will truly fit your budget. But you won’t know for sure until you try my new measure of how balanced you are in terms of what you’re saving and borrowing.
Before applying for your first mortgage, one of the most important steps you will need to take is to make a detailed budget. While your mortgage payment is an essential factor in that budget, contributions toward savings should be part of it as well. In a recent piece from the Globe and Mail, personal finance columnist Rob Carrick introduces a new way to ensure your mortgage can fit your life, not the other way around.
The Total Debt Service + Savings Ratio (TDSS) was introduced as a way to factor in saving by managing it along with more substantial life costs. Carrick created the calculator by adding savings, other debt repayment and non-essentials to the classic Total Debt Service Ratio (TDS) that lenders use to qualify you for a mortgage. The TDS determines if you are able to pay what you're planning on borrowing. By using the TDSS beforehand, you will have a clearer understanding of exactly what your output costs will be each month once you're paying down the mortgage for your dream home. For more information, talk to an Ottawa Mortgage Broker.