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Financial Literacy Month-BMO's Tip of the Day: Housing Affordability and the One-Third Rule
By: Marketwired .
Nov. 11, 2012 08:00 AM
TORONTO, ONTARIO -- (Marketwire) -- 11/11/12 -- To mark Financial Literacy Month, BMO Financial Group is releasing a series of financial tips throughout November. As part of BMO's commitment to 'Making Money Make Sense', the tips are designed to help individuals and families save and manage their day-to-day finances more effectively.
BMO's Tip of the Day: Stick to the one-third rule when planning the purchase of a home.
When assessing whether or not a new home is financially realistic, remember that housing costs - including mortgage payments, utilities and taxes - should not take up more than one-third of your total household income.
"If you can land safely within these parameters, then homeownership is an affordable and realistic option," said Laura Parsons, Mortgage Expert, BMO Bank of Montreal.
Ms. Parsons added that Canadians looking to buy a home should choose a shorter amortization, which will save homeowners thousands of dollars in interest over the life of the mortgage and ensure Canadians can begin building equity in their home faster.
For those looking to buy a home, try the BMO Mortgage Calculator to determine how much you can realistically afford.
"CFEE commends BMO's ongoing efforts to support Financial Literacy in Canada and promote ways in which Canadians can increase their competence and confidence when managing their personal finances on a day-to day-basis," said Gary Rabbior, President, Canadian Foundation for Economic Education (CFEE).
BMO Financial Literacy Month Tips
November 5: Space out payments to avoid cash-flow problems.
November 10: Understand what you can hold in your RRSP.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $542 billion as at July 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.
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