My Opinion : When calculating finances or determining what people can afford, it is common for certain expenses to be overlooked or underestimated. This can happen for a variety of reasons, such as a lack of awareness about the total cost of these expenses or a tendency to focus on more predictable or fixed expenses, such as rent or mortgage payments.
One common expense that is often left out of financial calculations is the cost of food. While it may seem like a small or insignificant expense, the cost of food can add up quickly, especially if you are eating out or purchasing expensive or specialty items. To get a more accurate picture of your financial situation, it is important to include all food expenses in your budget, including groceries, dining out, and any other food-related costs.
Another expense that is often overlooked is the cost of a cell phone plan. While it may seem like a small monthly fee, the cost of a cell phone plan can add up over time, especially if you have a high-priced plan with a lot of data or if you have multiple lines for your family. It is important to carefully consider your cell phone needs and choose a plan that fits your budget.
Car insurance is another expense that is often left out of financial calculations. While it may not seem like a large expense, the cost of car insurance can vary significantly depending on factors such as your age, driving history, and the type of vehicle you own. It is important to shop around and compare quotes from multiple insurance companies to find the best rate, and to include the cost of insurance in your budget.
In conclusion, it is important to be aware of all of your expenses, including those that may seem small or insignificant, when calculating your finances or determining what you can afford. By including all of your expenses in your budget, you can get a more accurate picture of your financial situation and make better decisions about your spending.
By : Mike Martins
Article By the CBC reads
Some home buyers might have to reconsider what they can afford in Vancouver as of Jan. 1.
New mortgage lending rules issued in 2017 by Canada’s banking regulator set a new qualifying rate for uninsured mortgages (those with at least a 20 per cent down payment on the home price).
Home buyers who have qualified for a mortgage at a rate of 2.9 per cent, for example, will now have to prove they could absorb a rate hike of two percentage points or the five-year average rate posted by the Bank of Canada — whichever is higher.
The tougher new rules on mortgage lending are aimed at protecting lenders and borrowers; the federal government wants to make sure borrowers can afford a potential rate hike.
“If you’re looking at a qualifying standard that has a higher interest rate, that means that for the same income you’re going to be able to borrow less,” UBC Real Estate Economist Tsur Somerville said.
Previously, only insured borrowers had to undergo such a test.
Some will be hit harder than others
Vancouver real estate agent Chris Ryan says the new rules will hit some local buyers harder than others.
“People who were looking at homes in the 2.5’s now are going to be coming down and closer to the 1.9’s, and so everyone is going to jump down a bit,” Ryan said.
“Where that leads to, it’s hard to predict,” he added.
The change comes as Canadians face record-high levels of debt.
“While this is going to be difficult for borrowers, particularly young borrowers in certain markets, what you want from your federal regulator is essentially to pay attention to a big picture and to take action before a crisis happens,” Somerville said.
Sellers also affected
In Metro Vancouver, realtors say owning a detached home will become even more challenging than it already is.
“Homes that don’t have suites or laneway houses, I believe those are going to become a little bit less desirable,” Ryan said.
“People are going to be looking for houses that produce more income, with potentially one to two suites down below,” he added.
Ryan says first time home buyers will be among the hardest hit. Real estate experts say the demand for attached homes like condos and townhouses will go up.
“Every time you put in a restriction, it makes it more challenging for people,” Ryan said.
The new stress test rules won’t apply to mortgage renewals, as long as they are with the same lender.