A Powerful Way to Boost Your Homebuying Budget That Has Nothing to Do with Interest Rates

In Alberta, we have a love affair with our wheels. However, at some point, many Albertans must decide what they love more:

Owning a home or owning a car.

Of course, it's not always an either-or proposition. Perhaps you can trade in the $65,000 SUV for a $25,000 newer used sedan. In turn, you cut your monthly car payment by over half. This reduces your debt servicing ratios which makes mortgage brokers--and the lenders they work with--happy.

I know what you're saying: 'Karri, I am paying a ton in rent already. Why can't I use that toward a mortgage?'

The landlord doesn't care about how much debt you're carrying. He only cares that you're making rent every month. Lenders, however, will only lend what falls within their debt servicing guidelines. For example, on insured mortgages with less than 20% down, the maximum amount of gross income you may use toward debt servicing is 44%, including mortgage payments.

So, let's crunch some numbers and see if that shiny new pickup truck is really worth it...