How To Test Budget A Mortgage Before Buying A Home : The Saturday Weekend Review #250

How to test budget a mortgage before buying a home-1



Think about the above statement for a moment and ask yourself how that may have changed your past or current budget before buying your home. You may find that had you created a test budget before that purchase you may have noticed that you shouldn’t have spent so much.

Typically you wouldn’t hear me say anything about using a test budget because a budget is a budget, however there are times when pretending to budget comes in handy. Forget about the word pretend for a moment and consider the reasons why you would want to prepare a test budget and how it would benefit you as a potential homeowner.

  1. Can I afford the house
  2. Can I afford the house
  3. Can I afford the house


Start Young Finish Free


I often like to believe that anyone who starts learning about finance from a young age will have basic knowledge to make financial decisions that may not impact their lives the way someone who did not. This is why I urge parents to teach themselves about finance FIRST and pass that knowledge on to their kids.

Even then there are parents who have somewhat of an idea about money, budgets, interest rates, debt and so on and pass along skills that may or may not be accurate. This is why you need to learn from a trusted source such as a financial advisor, finance courses or reading lots of reputable online sources or books.

The education is available for those willing to learn.

When I was young and living with my parents I obviously wasn’t using a budget however as time went on and I earned money, I saved money. I never touched the money I saved because I wanted to keep it handy for the time I moved out and to buy my first car. You would think this is merely a savings vessel but for a child I was budgeting my money without knowing it because i would pay myself a few pounds a month to do whatever I wanted with.


University Kid to Homeowner


Moving forward where I’ve bought my car, moved out to attend university I was frugal and still saving what I could while working and studying. Money was tight as you would expect for a University student but I continued to only pay myself first x amount of dollars each month.

It was these moments in my life that I realized how important saving money was but also to limit what I was allowed to spend. As an old fart now I still get an allowance and it is a category in our monthly budget just like it was when I was growing up but without the actual budget.

In a way it was a test budget that I was creating and learning to understand using baby steps. Clearly I didn’t have any of the major budgeting categories apart from savings but it taught me that if you test budget or test something out before you jump into it you know better where you will stand financially.

As you may know I bought my first flat when I was 21 years old and my first house at 24 which was a struggle financially but two of the best decisions I had ever made. I still used financial habits which I created at a young age to get me through the house purchase. There’s a difference between getting through and leaping over which I came to learn on my financial learning journey.


Test Budget-What is this?


Now that I’m in my 40’s there was something I wish I had done back in the UK and that was to create a test budget before I had even made my the purchase of my first flat. After we got married in Canada we were renting a room while we went back to school. It was near the end of this rental journey that we created a paper budget but it was not something we followed recurrently.

The purpose of our paper test budget scribbles as we liked to call them was to see if we could financially afford to purchase a home with our current income. We were already living very frugal so we felt there was no real need for an actual budget. That “we don’t need a budget” was a silly misconception of frugal living, YES we did.

Our test budget was far from perfect however it did tackle most of the necessary budget categories that we use today as homeowners and offer free to our CBB readers. Free Money Saving Tools

Thinking back we realized that it was a continuation of those financial baby steps that led us to the point we are at now in terms of understanding money.  In ten years I will likely look back at this article and easily continue what we have done with our money and how we’ve jumped over other life hurdles through experience and continued pursuit of financial knowledge.

My point is that the more effort you put into your money even if it is baby steps the better you will become on the other side. The other side is not after death either just to clarify, it’s the freedom side of money so you can enjoy life without so much burden on your shoulders. It also has nothing to do with being rich either.


Two Budget Living


Today we support a budget in any situation whether it be living on your own, relationships or still living at home with family or friends. A budget is crucial in all facets of daily living and future dealings so it’s important to consider what your goals are before budgeting. If we could go back in time (1.21 Gigawatts) I would tell us to ditch the paper scribbles and to create a test budget along with an actual budget.

I know you may think it’s more work but not really if you consider what the outcome could bring you on the other side. Keep in mind that anything can happen financially during your lifetime and it probably will but you’ll be better served if you know how to handle financial falls.


Frugal doesn’t equal financial freedom


You can be frugal and save money to spend on something else of you can be both frugal and financially free by using a budget. Even if you save a few dollars a month it was a few dollars more than you had earlier. I know there are many people who suffer financially now and it’s a rough spot to be in. The good part is that things can change by making sound financial decisions. This is however a case by case situation.


SOLD because The calculator says YES


If you jump into buying a house with a mortgage that you struggle to pay even if you thought you could afford you might have regrets. Think of it in terms of…. YOU CAN AFFORD TO PAY THE MORTGAGE ONLY. Then what? What about all of the rest of your budget categories? Who will pay for them. This is an area that many homeowners fail in and that is to believe what others say they can do with their money instead of doing the simple math themselves.

One of the smartest things we did was to buy our current home using only one of our incomes. We did run numbers using a mortgage calculator but we sure as hell didn’t listen to it or what the bank said we could afford. In fact it was less than one of our incomes which helped tremendously when Mrs. CBB lost her job only a few months after making the house purchase. Talk about scary but we were confident that we could still make it and we did. Just five years later we had our house paid in full.

That’s just another reason creating a test budget BEFORE you buy a home is critical and not just using a mortgage calculator as a definitive YES or NO. They may be handy but they certainly won’t tell you whether you can live comfortably with your given financial status or other situations that might arise. Job loss above as an example is one of those situations.

Sometimes you need more than a mortgage calculator to tell you what you can and can’t afford when it comes to buying a house and taking on a mortgage. In fact one of the top reasons people struggle with their new mortgage is because they failed to do one thing before signing on the dotted line, test budgeting.


How to create a test budget


If you don’t want to get into using a test budget and an actual budget you can simply add to your current rental costs the home you plan to purchase including property taxes and maintenance fees.

Renters most often have utilities included with their rent but for those that don’t you already have budget categories for hydro, water, gas and other rentals. Consider these when creating your test budget because you will most likely have to pay for them as a homeowner as variable expenses. This means the costs will go up and down depending on usage and the way you set up your payment plan.

For example:

We rented a room that cost us $500 all-inclusive which means we pay nothing more than the $500 every month. Ah, the life of a renter was easy for us. The internet, cable, water, property taxes, hydro, gas, home phone was all included in that $500 price.

What you need to do is first do an analysis or your debt to income ratio. You need to know how much money you net or bring home each month minus your debts not including the rent. From there you can use one of those handy mortgage calculators to see what you could afford to purchase.

Let’s say you are single and earn $50,000/year and take home $3000 a month.

The important thing to remember here is that this test budget will take some work to put together which will include making phone calls but you’ll learn more than you imagined in the process. You will be thankful, trust me.

Your test Budget would include critical payments such as; this is not inclusive just an idea.

  • Mortgage (if your current rent is $500 a month and your mortgage would be approx $1000 a month with a down-payment add $500 to your test budget. Consider current interest rates but be aware they can go up based on when you purchase your home and what rate and term you agree to. This is only meant to be a test budget so accuracy will obviously be unbalanced but give you a good idea whether to leap or not.
  • Hydro – find out what the costs of hydro might be on a home you’d like to purchase
  • Gas- same as above
  • Water Heater Rental- same as above
  • Home Maintenance- keep approx 1-2% of your yearly maintenance around the house unless you are buying a condo that has maintenance fees you pay separately.
  • Property Taxes- Call the city and tell them you are creating a test budget and ask them what you might pay for a certain home or priced home in the area.
  • House insurance- Call an insurance company
  • Savings- You should always aim to have an emergency savings fund that is 6 months to a year of test budget. (I’d suggest saving this before buying your house)
  • Transportation

Other budget categories must be added based on need FIRST.

  • Groceries
  • Life insurance
  • Vehicle insurance/Repair/Maintenance
  • Healthcare
  • Consumer Debt
  • Personal Care
  • Daycare
  • Investments
  • Other important charges

From there you can add other stuff that is not a need but more a want based on your lifestyle.

Can you really afford these? Well if you can’t pay for the above then no. If you are not saving money then no. The idea is to balance your test budget to include emergency money FIRST because a cell phone won’t put a roof over you, if you catch my drift.

  • Home phone
  • Cell phone
  • Internet
  • Subscriptions
  • Hobbies

Other things to consider might be projected expenses that occur in your actual budget and your test budget after purchasing a home. An example of this might be vehicle maintenance or stuff you need to get done once or twice a year that you need to budge for every month so you have the money ready.

Also, don’t forget to talk to a real estate agent who will explain to you all the money needed for closing costs, mortgage insurance that you need to have available BEFORE you buy. There are also certain credits you can get as a first time home buyer.

The best part about your test budget is that for many of you it can become a savings port before buying. Take all the extra money you poured into your test budget and put it towards your down-payment or other costs.


Home Buying Anxiety


I’d say if you go into buying a home without any type of anxiety you’re doing it wrong. Everyone does whether they are debt free or not. The only way to ease some of that home buyers anxiety is to become knowledgeable about the process which includes the biggest stress of all, Can I really afford to buy a home.

Consider all facets of home buying and costs involved BEFORE signing the paperwork my friends. You’ll be glad you did.

Discussion:  Did you run a test budget or even a scribble budget before you bought your first home? What tips could you offer today for those who are looking to buy but aren’t sure if they can afford it all?

Your True Best Mortgage Rate (320x100)


CBB At Home


We’ve finally decided to go paperless with our bills and automate them. More on that to come in an upcoming blog post.

This week was all about the love as we conquered another Valentine’s Day in the CBB house and I didn’t have to sleep on the deck. I bought Mrs. CBB flowers this year even though I know she would rather me not spend the money on them.

We’ve always thought of spending money on things we need but sometimes the things we need are beauty so spending $30 on a dozen roses not only lit up the room but it made her smile. That was worth the money over and over especially given the tough times we’ve entered into with family right now.

The other fun part to our week was setting up our PC Optimum Card that we were told would be a simple process. It is when you are doing it for one person but combining households is a PITA if you ask me. Even I had to make phone calls to understand the marriage of two accounts. It’s complete now but I spent hours on speaker phone as did Mrs. CBB and more completing the process. Done.Happy.Moving On

Note: I was in the midst of finishing my post when the call came in that my FIL had passed. The past two weeks have been filled with funeral planning, estates, will and so much more. I’ll be blogging about it soon. I’ve just finished this blog post but what I’ve written in this section were my words two weeks ago. RIP father.

To finish off the week we are heading home to see what we can help with around the house at the in-laws. I know I’ll be fixing the oven and likely doing some clearing out of stuff int he basement, mostly empty boxes. We’re working on clearing out stuff in the house now while we can so it’s not a huge job when and if the house goes to sell. It’s amazing how much stuff we can acquire over the years.

That’s our week…. now I’m hungry. What else is new, right?

Have a great week and enjoy your Family Day 2018!



CBB Published Posts


sugar-free low carb chocolate barsIf you have a question that you would like to ask me fill out the Contact Mr.CBB form on the blog home page and I’ll do my best to reply to each question.

If you would like to share a story via a Fan Question please ensure that there is minimum 500 words and lots of details…we love details!

Contact me for more info at

Top Post This Week: Free Money Saving Tools


Favourite Weekly Read


I stumbled upon this post about how retirement causes brain function to rapidly decline which had me thinking about my parents and my in-laws. Both sets of parents are retired and only one is suffering memory loss worse than the other 3.

New research shows that brain function declines rapidly as soon as people stop work and put their feet up. It appears that the lack of regular stimulation takes a heavy toll on cognitive function and speeds up memory loss and dementia, researchers warned.

Oddly enough the one that is suffering memory loss since retiring some 6 years ago doesn’t interact with people much outside of grocery shopping or the telephone, doesn’t read, write or engage in activities to keep the brain going. The others all do. I don’t know how much science is behind it all but certainly something to ponder for those in retirement mode or on the way down that path.

What are some things you do to keep your mind going during retirement?


Making A Difference 2018


Making A Difference Canadian Budget Binder MAD

The Making A Difference Networking Series 2018 is booking NOW!! If you are a Personal Finance Blogger from anywhere around the world and haven’t had your blog featured please contact me today for a date and details. This feature may not run every Saturday Weekend Review (SWR) depending on booking and publication dates.

money on purposemoney on purpose

Hi there Mr. CBB and Readers,

My name is John Claborn and I run the finance blog, Money On Purpose.

Our blog teaches you how to give purpose to your money by figuring out what you truly want to do with your finances. The vision for Money on Purpose is to empower others to see money in a way that’s life-giving, not life-sucking.

We want to see you take your money by the neck and control it rather than having your money control you! Money is not evil. In fact, money is a good thing!

Money buys things. Money helps people. Money drives our economies.

Conversely, money buys bad things. Money destroys people. Money hinders our personal growth. The way in which we view our money is the driving force behind the manner in which we handle our money.

Our mission was birthed out of a disdain for the status quo. 9-5 to retire in 40 years with a nice pension and 401k simply just didn’t resonate with us. We wanted to leave a legacy that didn’t resolve around money or work. We wanted purpose to be front and center. We love work. Work is a beautiful thing.

Few things are more fulfilling than a really productive day at the “office”. One of the by-products of work, in most cases, is financial gain. Regardless of purpose you find or do not find in your vocation, you can find immense purpose in what you do with the money you receive from that work.

We want you to see how money can be viewed from a proper perspective. Rather than constantly checking your balance in your bank account to see if there is enough in there or waiting until the 1st of the next month to make a purchase because funds are running low for that month, we want to open you up to a whole new world of financial development!

Check us out at My Money On Purpose.

Thanks for having us come by Mr.CBB.


CBB Words of Wisdom


stop overthinking about what everyone says you must do with your money quote-1

It’s easy for someone to tell you what you should be doing with your money which can be overwhelming for people especially when that someone doesn’t know your situation. It’s one thing to read about financial tips but it’s another thing to be dishing out advice to people in real-life that don’t want to listen to it.

Not everyone wants to be told what to do with their money. It’s yours so do what you want to do and whatever the consequences, you live with them good or bad. Hopefully all good though.


Parenting and Home Life


Over at Sugar Spice and Glitter I learned about making a Paper Chain of Kindness a colourful craft for toddlers. This is a wonderful idea that we will certainly craft with our son but I also thought it would be a fun thing for adults to do as a reminder how far kind words will go.

Children are always watching and listening because it helps them to grow which includes emotionally. Too often it’s easier to snap back or instead of sharing ideas or thoughts it is communicated with anger. Think about how you can improve the way you communicate and let kindness lead the way.

paper chain of kindness


Relationship 101


Words DO matter in a relationship and as Tony Robbins points out in his article “Words matter: You Vs. I“, you must learn how to change your language for any relationship to survive.

most common relationship conflicts

Budget-Friendly Recipe Pick of the Week



I think I’ve found the best recipe for Chicken over at Rock Recipes with Barry and you won’t want to miss out because his recipe for Double Crunch Honey Chicken has been shared over 500,000 times across social media.

double crunch honey garlic chicken

Saturday Search Term Giggles


Every week I get tens of thousands of people visit Canadian Budget Binder because they did a search online and found my blog. (SIC) means I’ve copied the text exactly and it has spelling errors.

  • Canada Food Shopping So Expensive– Welcome to Canada!
  • How to make flavoured milk from toffee– Hmm, pour toffee flavour in milk?
  • Best way to make money in Canada– Yawn, one of those questions you just shake your head at. Snap your fingers of course!
  • How to pay $100 for groceries a year– If you find out please come back and share with us.
  • Traditional Soft Bums Recipe– Haha, no recipe for soft bums here but we do have a nice Scottish Bap!

Most times funny, Sometimes serious.

Don’t forget to Follow me on Social Media and Subscribe to the blog.

Hey…if you see any mistakes let me know. I’m not an editor just a guy who likes to write and yes I make mistakes.

Note: Some posts on CBB may be paid and written by me and is of my opinion of a product/service that I’ve tried and used before. Please read disclaimer.


  1. […] Really, who wants to deal with neighbours who can’t be bothered to take care of their property? Buying a house is not a one-time-deal and it requires daily, monthly and yearly maintenance. Saving a portion of your net income each month for these costs are very important when deciding whether you can afford to buy a home or not. […]

  2. […] afraid there’s not much more that can be done apart from tonnes or house buying research and building a budget that includes a mortgage to see just how much house you can afford and to go from there. If affordable housing the community […]

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