Kanetix Forum

I would like to know, what is the ideal amortization period?

Let¿s explain what an amortization period is first. It is the time it takes to pay off a mortgage in full (assuming all scheduled payments are met, extra payments are not applied to the mortgage and the interest rate stays the same). Until recently, the longest amortization period a person could get was 25 years. This has changed and now people can get a mortgage that is amortized up to 40 years. While a 40-year amortization period may sound appealing because it means your mortgage payments are lower than if it were a 25-year period, the fact is you will end up paying more in interest in the long run.

The ideal amortization will vary by homeowner. There is no one magic number for everyone. But, you¿ll find that most people suggest that the shorter the better, that way you pay off your mortgage sooner and pay less in interest for it.

Paul Sidhu, Principal Mortgage Broker at KTX Financial.

Neither Kanetix® nor the KanetixForum.ca is a mortgage broker or agent. Although this information has been passed along to you from KTX Financial through the Forum, we are not responsible for the opinions expressed by them. Mortgages can be complicated. When reading these answers, keep in mind each person¿s situation is unique. Individual responses may vary depending on your lender, geographic location, and specific circumstances. If you have a similar situation, always speak with your mortgage provider, or a licensed mortgage representative, for terms and conditions that may apply to you.

Are there any tips you can share to help my wife and I financially prepare for our home loan?

There are definitely a couple of things you can do to prepare yourself financially before applying for a loan. Below, I've listed some tips:

• Above all, be sure to make your credit card payments on time! If you have problems doing this, contact your creditors as soon as possible and make whatever payments you can afford even if it¿s not the minimum.


• Instead of using your credit card, use cash in order to keep your GDS and TDS down.


• I encourage that you have a financial cushion of savings to fall back on in case of any unforeseen events.


• Added debt might affect your ability to qualify for a loan, so try not to make any large credit purchases.

Paul Sidhu, Principal Mortgage Broker at KTX Financial Ltd.

Neither Kanetix® nor the KanetixForum.ca is a mortgage broker or agent. Although this information has been passed along to you from KTX Financial through the Forum, we are not responsible for the opinions expressed by them. Mortgages can be complicated. When reading these answers, keep in mind each person¿s situation is unique. Individual responses may vary depending on your lender, geographic location, and specific circumstances. If you have a similar situation, always speak with your mortgage provider, or a licensed mortgage representative, for terms and conditions that may apply to you.

Paul: what is GDS and TDS?

GDS is your gross debt service ratio - The percentage of gross income required to cover the monthly payments associated with housing costs. Most lenders recommend that the GDS ratio be no more than 32% of your gross (before tax) monthly income.(there are a few special circumstance exceptions)

TDS is your total debt service ratio - The percentage of gross income needed to cover monthly payments for housing and all other debts including other financing obligations. The total should generally not exceed 40% of gross monthly income.

Paul Sidhu, Principal Mortgage Broker at KTX Financial Ltd.

Neither Kanetix® nor the KanetixForum.ca is a mortgage broker or agent. Although this information has been passed along to you from KTX Financial through the Forum, we are not responsible for the opinions expressed by them. Mortgages can be complicated. When reading these answers, keep in mind each person¿s situation is unique. Individual responses may vary depending on your lender, geographic location, and specific circumstances. If you have a similar situation, always speak with your mortgage provider, or a licensed mortgage representative, for terms and conditions that may apply to you.