Teaandtoday5

+1

Piff Poff

I'm with you, we were in the bank the other day and Prime was at 3% so very unlikely that your going to get a mortgage for less than Prime.

Atlantic Xpat

You're not being thick. Mark G appears to be have inside information on where to get a 2% mortgage rate. Just not willing to share it. Either that or it doesn't exist.

Pretty Flowers

I have 2.99% fixed for five years from Summer 2012. I feel ripped off right now

dbd33

Our mortgage is at over 3%! Maybe we're eligible for food stamps.

Atlantic Xpat

I'm paying 4%. Cash donations willingly accepted.

Shard

It is possible to get interest only mortgages (in the UK BUY2Let market). Nothing inherently wrong with this concept.

Aviator

If you can and paying no principal down, the compounded effect the interest paid over the life of the mortgage would be horrendous, let alone still owing the full principal. It is like renting without the risk for the landlord.

Almost Canadian

I didn't say that there was but, with such mortgages, doesn't the mortgagor also pay interest to the mortgagee for the duration of the mortgage?

scrubbedexpat133

I have just closed on my first house (yay ) My mortgage is 2.94% fixed for 5 years. Moncton is very much a buyers market. I have a 4 bed 3 bathroom semi, aprox 2100 sq feet in a very nice area. My back garden is about 60 feet x 25. I have trees in the back which is an absolute rarity with this type of house/price bracket. The house is less than a year old, the previous owners relocated back to France and were kind enough to leave me a cooker, dishwasher, built in microwave, fridge freezer and a washing machine and tumble dryer. (all stainless) All day this for $162k....... This is less than 3 times my income.......never in a million years could I have this and the lifestyle I have in the UK doing the job I love. (trucker). I fully intend to pay as much as possible over the next 5 years as I think that interest rates will probably be double by then.

I think a big problem with housing is that people overstretch themselves. We are convinced as a society that
we have to have xyz in a home. I think that it is worse in the UK than here. Except Vancouver, Calgary and Toronto. I know that people don't always have a choice in certain areas as I used to live in Bournemouth and the New Forest. London prices Liverpool wages. Like anything people as a whole do have control we just lack the collective will to exercise it.

orly

Sure you don't just pay the interest for the first 8 years. It's illustrative.

Take a 300k loan. Assume something around 4-5% average interest. 25 yr term. The repayment is around $1,600/month. The total you actually pay is somewhere around 500k.

The 200k gap between 300k and 500k at 1,600/month is about 120 months worth.

You spend many years just paying that gap. How you divvy it up doesn't really matter - you're still paying it. That's what interest is. Great for your lender

I know that gets lost on a lot of people. I've spoken to relatives and friends buying houses. They look at the headline price and think "Yep...seems affordable". Some have little to no notion of what a 300k house would actually cost them. It's not even remotely close to 300k. You can throw on the other "costs of ownership" like property taxes, insurance and maintenance. On a 300k house you'll be wanting the price to treble by the time you sell if you're looking to make money on the deal. The only reason the house is 300k in the first place is because income tax rates and interest rates are lower than historical averages.

And no...house prices just can't keep trebling forever.

Atlantic Xpat

Well, yes. Interest is what you pay to borrow the money, otherwise there would be no incentive for the lender to lend it to you. What's the issue with that?

Your $375k house (I'll assume we put down 20% deposit) would presumably cost you at least $1600, if not more to rent? You've got to live somewhere right? To my mind, viewing mortgage payments as consumption - money you pay for the use of a home - is OK with the bonus that yes, at some point you've paid it off and own the asset. And yes, I know that you spend money on maintaining the house over that term, indirectly you'll do the same through rent.

The danger such as it is in low interest rates and a generation that has only experienced house price inflation is that you buy that $375k house in a few years time it's worth $475k nominally & since you've made money you refinance to liberate that $100k to buy cars, trucks, boats, stuff, holidays. Of course you haven't actually made anything until you come to sell it and all you are doing is financing stuff over a long period, and yes incurring large amounts of interest in the process. Plus of course if prices do slump and/or mortgage rates rise you are left with little to no equity and a payment you can't meet. Shiny toys not much use then.

I suspect that much of the conspicuous consumption one sees in Canada - certainly around these parts - is funded by cheap credit and the illusion of making money through house price inflation. I can't think how else people do it. Come the crash there will be a lot of cheap toys to be had I think.

orly

From my experience, the rent is always significantly cheaper, but that's likely a consequence of living in a province with rent controls.

The cheapest condo in my city, by my estimates, would cost about 25% more than I pay in rent. The condo in question is also barely 3/4 the size of my current place. Given the price I'd imagine I'm safe in assuming it needs a fair chunk of work too. My wife and I have kept an eye on it and considered going to view but having seen it on the market for many months we're thinking there is something wrong with it or the building it's in.

To buy something comparable in size and fitting to my rented place? I have it costing about 60% more than the rent. These figures are based on the current low interest rates which I don't believe will last longer term anyway.

Shard

When comparing rent vs buy (financial reasons) its a good idea to look at it on a five year view. No one knows the future, but with some research you can make your own educated guess on value appreciation and then see if it works for you or not. Strata fees are a big negative in such analyses, consider houses in affordable areas too.

scrubbedexpat091

In my area renting vs buying cost wise solely on rent and monthly payment is about the same. You can buy a condo and even a house some times and pay the same per month for your payment as it would cost to rent.

Rents in this are are high, with very few offering a reasonable rent for what your getting in return. The cheapest right now rent wise in town 850/per month but its old, dirty, crime infested, known for bed bugs, and other undesirables as well. Its just a nasty nasty place.

It will cost your 1,000 to 1,300 for a decent 1 bed room apartment in a decent complex. Buying in the same complex with strata fees you can get a lower payment.

Our complex is the only below market complex in town, 53 units in total, 30 are BC Housing and only open to BC Housing clients and rent is geared to income to a max of 575.

The 20 units open to the public for rent, rent from 715 to 765 per month.

The units here are 4 years old. Cheapest place in town to rent.