It's a Personal Decision

While you may qualify for a certain mortgage amount, you should also consider how it will impact your lifestyle and other things that are important to you.

Will you be able to maintain your current lifestyle with the mortgage payments you're considering. Are there changes to your current spending that you can make to be able afford that new home?

Be Honest

Be honest in deciding what you can afford! Small minor changes to your lifestyle are likely doable - however major changes really need to be considered.

Look hard at your current lifestyle - how much do you spend on going out to dinner, movies, travel, etc. You may decide to eat at home more often, watch movies at home instead of going out; whatever your change, you need to assess how drastic is this change in your lifestyle. Will you be satisfied with the changes you've made? A dramatic change in your lifestyle would not be recommended or may not necessarily happen. You still need to lead your life!

Future Considerations Too!

It is also important to think ahead. Where will you be in a few years - kids, new job, etc. How this will affect your future cash flow? Future changes to consider:

The impact of family changes will affect cash flow and your ability to meet your monthly financial obligations. For example, the birth of a child can mean less income coming in due to maternity leave, increased expenses with new clothes, furniture for the baby's room, strollers, car seats, etc.

Look at your employment situation - will you be getting a salary increase soon? Is your spouse/partner going back to work? You may then want to look at stretching yourself now, for the added flexibility later - getting into that home you really want now.

Some additional thoughts - if you have never owned a home before think about the additional costs associated with owning a home that will impact your cash flow:

  • Utilities - heat, hydro, internet, etc.
  • New fencing, deck
  • New furniture, window coverings
  • Shovels, rakes, etc.

Think About Balance

So you will need to decide. Is the starter home right for you? Something that will allow you to be a home owner now, understanding that in a few years as your family grows and changes, you may need a larger home. Or do you want to stretch and get that dream home now - and potentially never have to move again.

You'll be living with this decision beyond today so you need to think about balance. Remember you want to be able to sleep at night knowing you can make your payments!