Watch: What is mortgage affordability? + MORE Feb 27th

Signing a 30-year mortgage in Canada can be an attractive option for some home buyers in the face of relentless real estate prices.

In the city of Toronto, the average selling price for all home types reached $1.07 million in January 2022, according to figures from the Toronto Regional Real Estate Board. In Vancouver, the benchmark price for all properties jumped to $1.25 million, an 18% increase from the year before, according to the Real Estate Board of Greater Vancouver. 

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With prices like these, many buyers face mortgage payments that exceed what they can comfortably afford, even with a 25-year mortgage. By taking out a 30-year mortgage, buyers can stretch the limits of what they’re able to qualify for and create some extra wiggle room in their budget through smaller mortgage payments…

How do I calculate the capital gain on real estate sold in Ontario? I’m trying to figure out how much I should list my main resident property for—after deducting all expenses (interest, fees, taxes)—to arrive at a reasonable profit margin. Is there a tool or app that can do that? I searched the internet and couldn’t find any articles explaining this process.
–Yan
The ROI on real estate and calculating capital gains
Thanks for your question, Yan. There are a couple of different issues at play here, so I’ll start by clarifying a few points about capital gains. Next I’ll explain how I would approach a target sale price for real estate, as well as for other investments. 
You’re 2 minutes away from getting the best mortgage rates in CanadaAnswer a few quick questions to get a personalized rate quoteI’m buying a homeI’m renewing/refinancingYou will be leaving MoneySense. Just close the tab to return.

First off, since you refer to your “main resident property.” I want to be clear that the profit you earn on the sale of a property—called a capital gain—is exempt from income tax when that property is your principal residence…

Not sure how you much can borrow to purchase a property? To find out, you’ll need to know about “mortgage affordability.” That’s how much money you are able to borrow to purchase a home. This video outlines the factors that can influence mortgage affordability and it shares everything you need to calculate it yourself before approaching a lender.

Watch: What is mortgage affordability?
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