Buying a house is a major financial decision. Naturally, the amount of debt and assets one has when taking on a mortgage is an important consideration. Is it a good idea for Alberta families to purchase residential real estate while they are facing debt from other sources? Unsurprisingly, the answer to this question can vary depending on the particulars of the financial situations.
The first thing to consider is the amount of outstanding debt to repay. Smaller debt loads with shorter payment periods are more manageable when paired with a mortgage. Consider how payments compare to overall household income as well, in order to see how much is left to cover the housing. This is called debt-to-income ratio.
Anyone with more than a 30 percent debt-to-income ratio should be cautious about purchasing a home. However, there are some circumstances in which a higher debt-to-income ratio can still be compatible with a home purchase. For example, if aggressive repayment plans mean that this is a temporary situation and debt should be completely paid off in a few years, this should not dictate the decision.
People considering a residential real estate purchase should stay aware of their financial situation and not be swayed by people who have a vested interest in supporting a purchase, such as mortgage lenders. Individuals and families have a lot of information about their lifestyle and budgets that can be used to make the right purchase decision. When buying residential real estate, it is also important to lower the risk associated with the purchase by working with an Alberta lawyer to clarify purchase agreements.