Lets assume I bought a $230000 house at 5.5% with a 30yr loan. That means I have to pay $1300 per month (this does not include property tax, insurance, utilities and repairs). After 30 years I've paid $239800 in interest alone and have no liquid cash to show for it. Faster repayment is unlikely because as my pay goes up, my kids grow up and cost more. Also, pay increases are usually followed by an increase in consumer goods prices (inflation). Houses also need to be repaired to appreciate.
Why don't you put 3% down so you won't exhaust all your savings. And take a 40 yr am. to reduce your mthly mortgage pymnt. You should be able to continue putting aside $. Put it into an RRSP and use the refund to pay down the mortgage. You can accelerate paying off the mortgage later when your income increases. The property will probably be worth $500K in 25 yrs and your mortgage will be pd off. At that point you won't have to pay rent and you will still have retirement savings.
Glad you asked. My numbers: $34555 saved up to date. Monthly contributions to my savings is at least $1000 at 7% (indexed-GICs, etc). The calculation assumes no tax shelters used (such as RSPs, or any other tax avoidance) and that the tax rate on the interest from savings is 50% (worst case). In 25 years I'll have made $565419. Job loss during this time isn't an issue; I could live off saving for years. Job loss means vacation. Best case: 1 million saved in 25 years. I am debt free.
Thanks for your comment. If you have good credit, the mortgage rate is the same for a zero down mortgage. If you want a nice house for your family, rent isn't going to be cheap. In Canada house prices have been going up by an avge of 6%/year. People buy with zero down so they can get into the market. When you say run the numbers, what numbers are you talking about? It is obvious to me and 99% of the people I talk to that in long run you will be much further ahead if you own.
Mortgage Brokers and Real Estate agents are inside the real estate bubble. Look at the quote "In Canada house prices have been going up by an avge of 6%/year" I don't understand how they think this will continue for the life of the loan. It's all do to low interest rates and inflation. Buy Gold and Silver and wait this cycle out. I love renting and waiting for the Canadian real estate crash. It's coming.
Lets assume I bought a $230000 house at 5.5% with a 30yr loan. That means I have to pay $1300 per month (this does not include property tax, insurance, utilities and repairs). After 30 years I've paid $239800 in interest alone and have no liquid cash to show for it. Faster repayment is unlikely because as my pay goes up, my kids grow up and cost more. Also, pay increases are usually followed by an increase in consumer goods prices (inflation). Houses also need to be repaired to appreciate.
rumBoiSask 3 years ago
Why don't you put 3% down so you won't exhaust all your savings. And take a 40 yr am. to reduce your mthly mortgage pymnt. You should be able to continue putting aside $. Put it into an RRSP and use the refund to pay down the mortgage. You can accelerate paying off the mortgage later when your income increases. The property will probably be worth $500K in 25 yrs and your mortgage will be pd off. At that point you won't have to pay rent and you will still have retirement savings.
MortgageMensch 3 years ago
Glad you asked. My numbers: $34555 saved up to date. Monthly contributions to my savings is at least $1000 at 7% (indexed-GICs, etc). The calculation assumes no tax shelters used (such as RSPs, or any other tax avoidance) and that the tax rate on the interest from savings is 50% (worst case). In 25 years I'll have made $565419. Job loss during this time isn't an issue; I could live off saving for years. Job loss means vacation. Best case: 1 million saved in 25 years. I am debt free.
rumBoiSask 3 years ago
Thanks for your comment. If you have good credit, the mortgage rate is the same for a zero down mortgage. If you want a nice house for your family, rent isn't going to be cheap. In Canada house prices have been going up by an avge of 6%/year. People buy with zero down so they can get into the market. When you say run the numbers, what numbers are you talking about? It is obvious to me and 99% of the people I talk to that in long run you will be much further ahead if you own.
MortgageMensch 3 years ago
Why can't you see the bubble in Real Estate.
donaldsonb 3 years ago
You are a mortgage broker.
If you need a zero down mortgage, don't buy a house. Run the numbers, a slightly higher interest rate matters.
If you rent cheap and manage your money (aka don't buy consumer crap) you'll live a more stress free life and retire early. Run the numbers.
rumBoiSask 3 years ago
Mortgage Brokers and Real Estate agents are inside the real estate bubble. Look at the quote "In Canada house prices have been going up by an avge of 6%/year" I don't understand how they think this will continue for the life of the loan. It's all do to low interest rates and inflation. Buy Gold and Silver and wait this cycle out. I love renting and waiting for the Canadian real estate crash. It's coming.
donaldsonb 3 years ago