How much can you afford?

Figure out your net worth.  Your net worth is the amount you have left over once you have subtracted all your debts from your total assets.  Once you know what you are worth you can determine how much money you have to put down as a down payment and how much you will have in reserve in the event your financial circumstances change.

Figure out your cash flow.  Your net cash flow is the amount you have left over once your have subtracted your monthly expenses from your monthly income.  This will allow you to figure out how much you can afford in mortgage payments, maintenance fees and costs of living.

Up front costs include: Home inspection fees, survey fees, legal fees, land registration fees, appraisal fees, etc.

Ongoing costs include: Property taxes, utilities, property insurance, etc.

Monthly mortgage payments

Size matters.  The size of your mortgage payments will depend on your down payment, the amortization period, the rate terms and your payment schedule.

The minimum down payment is typically 5% in Canada.  If you put down less than 20%, mortgage default insurance is required, this will add to the total cost of your mortgage.  Remember that with the Home Buyers Plan provided by the Government of Canada, you can withdraw up to $25,000 from your Registered Retirement Savings Plan (RRSP) to make a down payment.  There are rules and restrictions to this program which can be found at http://www.servicecanada.gc.ca/eng/goc/home_buyers_plan.shtml.

How much can you borrow?

Before you start looking for that dream home, speak to your bank or mortgage lender to determine your pre-approval amount.  The maximum amount you qualify for will depend on your financial circumstances, but it is important to know how much your lender will give you before you make any commitments.

• 4 cups (1 l) milk
• 3 Chai tea bags
• 1 cinnamon stick
• 1 tbsp (15 ml) liquid honey or sugar
• 1/2 tsp (2 ml) pure vanilla extract
• Ice cubes

For taste:

• Cream

Garnishing:

• Cinnamon

• In a medium heavy-bottom saucepan, combine milk, tea bags and cinnamon stick.
• Heat over medium heat for 12 minutes or until steaming, stirring occasionally.
• Remove saucepan from heat.
• Discard tea bags and cinnamon.
• Stir in honey (or sugar) and vanilla.
• Cool to room temperature then chill completely, at least 3 hours.
• To serve, pour 1 cup (250 mL) of the milk mixture into each of 4 tall (16 oz/500 mL) serving glasses.
• Froth using a milk frother and top glass with ice.
• Garnish with cinnamon.

Yield: 4-6 servings