“Why” People Buy Residential Real Estate

Diane Buchanan • July 19, 2016

Yoda may have said, “…do or do not; there is no try”, but if you’re going to “do”— buy a home, for instance—for the love of Star Wars, know why you’re doing it.

Savvy business practice dictates that before making a decision you should know the “why?” Simon Sinek writes on this at length within his book Start with Why — certainly worth a look! This tool will serve to protect you from all kinds of pitfalls. It will allow you to objectively take stock of the situation, and it will (more often than not) keep you from entering into a scenario where you don’t have a clearly defined strategy/desired outcome.

Interestingly, the “why” in residential real estate has generally led buyers in one of two directions: either investment or lifestyle.

Investment

In a world where investing can be a tricky proposition at the best of times (not unlike walking into the MGM Grand), real estate, especially your primary residence, seems to be as close   to a sure thing as you can get. Property in Canada has pretty much always appreciated in value and depending where you live, it seems new records for house prices are being announced each quarter. It’s no wonder we feel home ownership is one of our fundamental rights as Canadians.

However as any good investor knows, past performance doesn’t indicate future results. People are starting to ask how long can this market last, as the media starts to circle back to the old “housing bubble” dialogue again. So is buying property solely as an investment a good idea today? Well, that really depends on your personal situation and is certainly worth a conversation. One we could have over a coffee!

If you are in a position to buy, and you have compared the cost of renting vs cost of the mortgage payment on a similar property, chances are you will find that buying is a good investment. The real kicker is that when (unlike traditional investments) you sell your home, the appreciation is tax-free money in your pocket.

Lifestyle

While the idea of buying in order to sell and earn a big profit is a fairly recent phenomenon, buying in order to achieve your lifestyle dreams is as old as the idea of home itself. This is what drove the entrepreneurial spirit of the wild west, and built the vast subdivisions of post-Second World War North America.

For most individuals, their home is their castle. It’s where they find privacy, solitude, relaxation, freedom, joy, pride, community, and the space to be themselves. It’s a pretty simple concept: people like to own their home.

When Worlds Collide

When considering your “why” of home buying, a lot of times it’s going to be a mixture of both investment and lifestyle. Obviously the house with the greatest potential for a large monetary return is the prudent, responsible choice. Location matters, neighbourhood matters, build matters, and potential renovations matter. You want to keep your property in great shape, as you would any investment!

But while you live there, pay down your mortgage, build equity, and see some long-term appreciation, you get to nap in your own comfy chair, in a room where you chose the paint colours.

This article was originally published in the July 2016 Dominion Lending Centres Newsletter.

DIANE BUCHANAN
 Mortgage Broker

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Mortgage Approval 101: GDS & TDS Explained

By Diane Buchanan • October 22, 2025
Can You Afford That Mortgage? Let’s Talk About Debt Service Ratios One of the biggest factors lenders look at when deciding whether you qualify for a mortgage is something called your debt service ratios. It’s a financial check-up to make sure you can handle the payments—not just for your new home, but for everything else you owe as well. If you’d rather skip the math and have someone walk through this with you, that’s what I’m here for. But if you like to understand how things work behind the scenes, keep reading. We’re going to break down what these ratios are, how to calculate them, and why they matter when it comes to getting approved. What Are Debt Service Ratios? Debt service ratios measure your ability to manage your financial obligations based on your income. There are two key ratios lenders care about: Gross Debt Service (GDS) This looks at the percentage of your income that would go toward housing expenses only. 2. Total Debt Service (TDS) This includes your housing costs plus all other debt payments—car loans, credit cards, student loans, support payments, etc. How to Calculate GDS and TDS Let’s break down the formulas. GDS Formula: (P + I + T + H + Condo Fees*) ÷ Gross Monthly Income Where: P = Principal I = Interest T = Property Taxes H = Heat Condo fees are usually calculated at 50% of the total amount TDS Formula: (GDS + Monthly Debt Payments) ÷ Gross Monthly Income These ratios tell lenders if your budget is already stretched too thin—or if you’ve got room to safely take on a mortgage. How High Is Too High? Most lenders follow maximum thresholds, especially for insured (high-ratio) mortgages. As of now, those limits are typically: GDS: Max 39% TDS: Max 44% Go above those numbers and your application could be declined, regardless of how confident you feel about your ability to manage the payments. Real-World Example Let’s say you’re earning $90,000 a year, or $7,500 a month. You find a home you love, and the monthly housing costs (mortgage payment, property tax, heat) total $1,700/month. GDS = $1,700 ÷ $7,500 = 22.7% You’re well under the 39% cap—so far, so good. Now factor in your other monthly obligations: Car loan: $300 Child support: $500 Credit card/line of credit payments: $700 Total other debt = $1,500/month Now add that to the $1,700 in housing costs: TDS = $3,200 ÷ $7,500 = 42.7% Uh oh. Even though your GDS looks great, your TDS is just over the 42% limit. That could put your mortgage approval at risk—even if you’re paying similar or higher rent now. What Can You Do? In cases like this, small adjustments can make a big difference: Consolidate or restructure your debts to lower monthly payments Reallocate part of your down payment to reduce high-interest debt Add a co-applicant to increase qualifying income Wait and build savings or credit strength before applying This is where working with an experienced mortgage professional pays off. We can look at your entire financial picture and help you make strategic moves to qualify confidently. Don’t Leave It to Chance Everyone’s situation is different, and debt service ratios aren’t something you want to guess at. The earlier you start the conversation, the more time you’ll have to improve your numbers and boost your chances of approval. If you're wondering how much home you can afford—or want help analyzing your own GDS and TDS—let’s connect. I’d be happy to walk through your numbers and help you build a solid mortgage strategy.

How Payment Frequency Impacts Mortgage Financing

By Diane Buchanan • October 15, 2025
You’ve most likely heard that there are two certainties in life; death and taxes. Well, as it relates to your mortgage, the single certainty is that you will pay back what you borrow, plus interest. With that said, the frequency of how often you make payments to the lender is somewhat up to you! The following looks at the different types of payment frequencies and how they impact your mortgage. Here are the six payment frequency types Monthly payments – 12 payments per year Semi-Monthly payments – 24 payments per year Bi-weekly payments – 26 payments per year Weekly payments – 52 payments per year Accelerated bi-weekly payments – 26 payments per year Accelerated weekly payments – 52 payments per year Options one through four are straightforward and designed to match your payment frequency with your employer. So if you get paid monthly, it makes sense to arrange your mortgage payments to come out a few days after payday. If you get paid every second Friday, it might make sense to have your mortgage payments match your payday. However, options five and six have that word accelerated before the payment frequency. Accelerated bi-weekly and accelerated weekly payments accelerate how fast you pay down your mortgage. Choosing the accelerated option allows you to lower your overall cost of borrowing on autopilot. Here’s how it works. With the accelerated bi-weekly payment frequency, you make 26 payments in the year. Instead of dividing the total annual payment by 26 payments, you divide the total yearly payment by 24 payments as if you set the payments as semi-monthly. Then you make 26 payments on the bi-weekly frequency at the higher amount. So let’s use a $1000 payment as the example: Monthly payments formula: $1000/1 with 12 payments per year. A payment of $1000 is made once per month for a total of $12,000 paid per year. Semi-monthly formula: $1000/2 with 24 payments per year. A payment of $500 is paid twice per month for a total of $12,000 paid per year. Bi-weekly formula: $1000 x 12 / 26 with 26 payments per year. A payment of $461.54 is made every second week for a total of $12,000 paid per year. Accelerated bi-weekly formula: $1000/2 with 26 payments per year. A payment of $500 is made every second week for a total of $13,000 paid per year. You see, by making the accelerated bi-weekly payments, it’s like you end up making two extra payments each year. By making a higher payment amount, you reduce your mortgage principal, which saves interest on the entire life of your mortgage. The payments for accelerated weekly payments work the same way. It’s just that you’d be making 52 payments a year instead of 26. By choosing an accelerated option for your payment frequency, you lower the overall cost of borrowing by making small extra payments as part of your regular payment schedule. Now, exactly how much you’ll save over the life of your mortgage is hard to nail down. Calculations are hard to do because of the many variables; mortgages come with different amortization periods and terms with varying interest rates along the way. However, an accelerated bi-weekly payment schedule could reduce your amortization by up to three years if maintained throughout the life of your mortgage. If you’d like to look at some of the numbers as they relate to you and your mortgage, please don’t hesitate to connect anytime; it would be a pleasure to work with you.