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"Affordable" mortgage

"Affordable" mortgage

Old Feb 23rd 2006, 10:59 am
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Red face "Affordable" mortgage

Hi,

This is to all out in Canada who are not fortunate enough to be mortgage free. I know this is very subjective, but would appreciate your views on what's an affordable mortgage amount?

Is anyone willing to share with us what the percentage of their gross monthly income they currently spend on their mortgage payments and comment on whether they can still have a decent lifestyle. ie. not having to watch every penny/cent all the time.

It's difficult to gauge this from the UK when you're unsure what your other financial commitments are going to be. The mortgage calculators provided by the banks and brokers obviously show you how much they are willing to lend you against your income but how realistic are their figures. One broker quoted that 30% of our household income was affordable but I have my doubts. Certainly in the UK my mortgage is much, much less that this % and yet on a similar income we are having to watch every penny. (OK, being Scottish, I'd probably do this anyway). Cheers
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Old Feb 23rd 2006, 2:07 pm
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Default Re: "Affordable" mortgage

Originally Posted by glenlivet
Hi,

This is to all out in Canada who are not fortunate enough to be mortgage free. I know this is very subjective, but would appreciate your views on what's an affordable mortgage amount?

Is anyone willing to share with us what the percentage of their gross monthly income they currently spend on their mortgage payments and comment on whether they can still have a decent lifestyle. ie. not having to watch every penny/cent all the time.

It's difficult to gauge this from the UK when you're unsure what your other financial commitments are going to be. The mortgage calculators provided by the banks and brokers obviously show you how much they are willing to lend you against your income but how realistic are their figures. One broker quoted that 30% of our household income was affordable but I have my doubts. Certainly in the UK my mortgage is much, much less that this % and yet on a similar income we are having to watch every penny. (OK, being Scottish, I'd probably do this anyway). Cheers
Our mortgage is $619 per month, which includes $133 property tax. This is about 20% of our monthly income and we are not quite in the comfort zone but not watching every penny either.
HTH
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Old Feb 23rd 2006, 4:31 pm
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Default Re: "Affordable" mortgage

Our mortgage is nearly $2k per month. But we live in Vancouver - prices are not cheap here! I pine for our nice cheap mortgage in England

But child care, gas and parking at work does wipe out all my take home pay (I am working for the medical benefits and the pension contributions!!!)

Ho hum

Clare
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Old Feb 23rd 2006, 4:40 pm
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Default Re: "Affordable" mortgage

Originally Posted by ClareBC
Our mortgage is nearly $2k per month. But we live in Vancouver - prices are not cheap here! I pine for our nice cheap mortgage in England

But child care, gas and parking at work does wipe out all my take home pay (I am working for the medical benefits and the pension contributions!!!)

Ho hum

Clare
Out mortgage, originally for $100,000, was $850 every two weeks and didn't include the taxes.

The point about working only for the benefits is an interesting one and something people may not have considered. At no point in the past twenty years has it been the case that my wife working would increase the household income. Besides the costs mentioned there's the loss of her as a tax deduction, that's always been an insurmountable hurdle for us. My accountant used to work out annually how much she'd have to earn to overcome the costs but he stopped bothering because it was never a realistic amount.
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Old Feb 23rd 2006, 4:47 pm
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Default Re: "Affordable" mortgage

Mortgage was for around $100k

Principal and interest ~$650, including property tax $~830

Thats a little over 20% of net income. I wouldnt want it to be more than that, and will aim to reduce it when it comes up for renemal this year. If we had no other debt to service then it would free up several hundred a month though, so there is more to consider.

Many people work for the benefits and pension rights alone. By the time you pay childcare etc thats all thats left in many cases. It strikes me as odd that stay at home parents are put in this situation regarding there state pension contributions, god knows child wrangling is a full time job and deserves recognision as such.

Last edited by iaink; Feb 23rd 2006 at 4:49 pm.
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Old Feb 23rd 2006, 6:21 pm
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Default Re: "Affordable" mortgage

Originally Posted by dbd33
Out mortgage, originally for $100,000, was $850 every two weeks and didn't include the taxes.

The point about working only for the benefits is an interesting one and something people may not have considered. At no point in the past twenty years has it been the case that my wife working would increase the household income. Besides the costs mentioned there's the loss of her as a tax deduction, that's always been an insurmountable hurdle for us. My accountant used to work out annually how much she'd have to earn to overcome the costs but he stopped bothering because it was never a realistic amount.
Hi

This seems really scary.Why is it so expensive $850 every 2 weeks on $100000. Do you not get 25 year mortgages like in the UK.
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Old Feb 23rd 2006, 6:35 pm
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Default Re: "Affordable" mortgage

Originally Posted by debiharper
Hi

This seems really scary.Why is it so expensive $850 every 2 weeks on $100000. Do you not get 25 year mortgages like in the UK.
Its up to you how fast you think you can pay it back. Obviously quicker is better.

20 or 25 year terms seem the norm, with it up for renewal every 5 years. As income rises its not uncommon to skip 5 years to pay it faster, so your first 5 years is ammortized over 25 years, the next one (on the remaining 20 years) is ammortized over 15, and then the remaining amount due ammortized over 5 years, so your 25 year mortgage if you are lucky and can afford the increase in payments might be gone in only 15 if your salary increases.
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Old Feb 23rd 2006, 6:44 pm
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Default Re: "Affordable" mortgage

Originally Posted by debiharper
Hi

This seems really scary.Why is it so expensive $850 every 2 weeks on $100000. Do you not get 25 year mortgages like in the UK.
Mortgages here are amortized over 25 years but the term is usually short, one, two or five years. After that number of years there are still two decades of payments so you renew or move the loan to somewhere with better rates and pay until the next renewal. Mortgages here can be at fixed or variable rates for the term and, just to complicate matters, some schemes allow you to switch mid-term.

That mortgage had a minimum payment of, I think $850/month but I made the payment every two weeks instead of monthly so as to pay it off quickly. Since I didn't live in the house and had to pay rent as well it just about killed me.
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Old Feb 23rd 2006, 6:49 pm
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Default Re: "Affordable" mortgage

From what I can work out, our mortgage debt as of end 2005 stood at about $145k. Our payment in that month was $1,115 which is about 20% of my wife's gross monthly income. We've always based our spending ability solely on her income, mainly because she was the only one with a salary for quite a while. I make more than she does now so I guess we're in the comfort zone.

<realizes with horror that we spend twice as much on groceries as on our mortgage>
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Old Feb 23rd 2006, 7:31 pm
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Default Re: "Affordable" mortgage

My mortgage is $1323/mth including propery taxes. It is about 45% of my net income, then daycare and bills leave me about $1800 overdrawn every month. I cannot rely on child support to fund the difference, but the fact that I should get it disqualifies me from any subsidies. 'Tis expensive in BC.....
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Old Feb 23rd 2006, 8:20 pm
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Default Re: "Affordable" mortgage

A very, very interesting thread.

My first reaction to all the above posts was HOLY CRAP!

It underlines what I say to all considering coming to Canada.

DO NOT budget over and beyond a "part-time" work lifestyle.

Because here in Canada, employment legislation allows one to be laid off easily, for reasons that have been outlawed in the UK.

My wife and I wanted the Canadian dream, with out the UK rat-race, that`s why we elected for NB, low housing cost, with medium salaries, adding up to a manageable budgeted lifestyle.

Thousands are piling into BC and ON, creating these horror stories regarding life with a mortgage!
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Old Feb 23rd 2006, 8:29 pm
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Default Re: "Affordable" mortgage

Originally Posted by steve of 5-0
Because here in Canada, employment legislation allows one to be laid off easily, for reasons that have been outlawed in the UK.
Precisely why I am trying to minimise my mortgage commitment this time around.

Maximum EI I think is $850 twice a month. Having tried living on that briefly in the past and paying the mortgage and other payments, I dont want to be in that situation again. And then they have the cheek to tax you on it and demand repayment after redundancy money was paid out. It really does suck.

Better to minimise the payment obligation and then pay extra on top in the good days than have to find a larger payment in the bad days
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Old Feb 23rd 2006, 8:33 pm
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Default Re: "Affordable" mortgage

I see what you mean.
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Old Feb 24th 2006, 12:11 am
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Default Re: "Affordable" mortgage

We were advised at borrowing no more than a monthly repayment of 40% of your net income. Depends what other outgoings you have aswell though.

We didn't need to borrow that much, but if we had , then I think month to month would be a little TOO tight!
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Old Feb 24th 2006, 2:13 am
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Default Re: "Affordable" mortgage

Originally Posted by Souvenir
<realizes with horror that we spend twice as much on groceries as on our mortgage>
Holy crap! Are you feeding a football team?
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