Will energy costs affect the sale of a home in London Ontario?
The Affordability Rule for Home Buyers Called PITH
The monthly housing costs shouldn’t be more than 32% of gross monthly income. Housing costs include monthly mortgage payments (principal and interest), property taxes and heating expenses.
For example, if income was $50,000 a year, the gross monthly income is $4,167, therefore to stay within the 32% range, the PITH rule is $1,292. If the mortgage payment is $1200 a month and utilities such as water, electrical, gas averages $360 per month equal $1560 per month, you would be over the 32% rule, it is actually at 37% and in most cases, not qualify for a mortgage.
At $60,000 per year, which is $5,000 a month, the 32% would be $1,600. Here is an excellent link for you to learn more about debt percentages and rules.
So, what has that got to do with selling your home?
You would attract more buyers in your price range because more buyers would qualify for a mortgage if energy costs were below average.
It holds for a $100,000 plus income earner as well.
Before upgrading your home and making improvements, your priority may be to see how to get the energy use down.
As well, when buying a home in London Ontario, do not just look at the purchase price. What is it going to cost to maintain it? It would be wise to know what the utility costs are, it will help get approval for a mortgage more manageable and if you were ever to sell your home down the road; you know your home with a low energy use will sell quicker than a house that has not been energy efficient.
In two separate instances last week, my buyer clients chose homes that were more energy efficient over others in the neighbourhood, even over better-priced ones, and in one case, over one that they loved but could not get their head around the expense it would have taken to get the home energy efficient
One was a condo townhouse with electric baseboards, and the other was a 23-year-old house with original windows and the original furnace.