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"Affordable" mortgage

"Affordable" mortgage

Old Feb 24th 2006, 2:54 am
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Default Re: "Affordable" mortgage

Originally Posted by Wannabe
Holy crap! Are you feeding a football team?
I spend about $1400 a month on groceries for six appetites....nothing fancy either, just reasonably good cuts of meat and loads of fresh veggies and fruit
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Old Feb 24th 2006, 9:01 am
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Smile Re: "Affordable" mortgage

Thanks for all the info. I must apologise to Rich007 who sent me a link a while ago to a good website that provides most of the answers. I forgot about this. Still, it's been handy getting other folks thoughts. Great site for all those about to buy a property in Canada.

http://www.cmhc.ca/en/co/buho/index.cfm
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Old Feb 24th 2006, 1:10 pm
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Default Re: "Affordable" mortgage

Originally Posted by Wannabe
Holy crap! Are you feeding a football team?
No. Two adults and a teenager. It is noticeable that our grocery bills drop dramatically during the Summer vacation, when teenager is not here.

That being said, we do eat well. Plus we buy our booze at the supermarket. Others may not be including that in their calculations.

My wife is also a clean freak. We spend a fortune on cleaning products.
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Old Feb 24th 2006, 8:01 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
Hi, We got a 'Line of Credit' rather than a mortgage, we can borrow upto $140,000. We only have to pay the interest currently 4.75% each month, we actually pay more than that to get the loan down and have borrowed just over $100,000. It is quite nice knowing that if we need more money it's there as we put all our savings into our house when we got here, it's also nice knowing if we want to pay more off we can, when we want and as little as the interest if needed.
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Old Feb 24th 2006, 8:08 pm
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Default Re: "Affordable" mortgage

Originally Posted by Piff Poff
Hi, We got a 'Line of Credit' rather than a mortgage, we can borrow upto $140,000. We only have to pay the interest currently 4.75% each month, we actually pay more than that to get the loan down and have borrowed just over $100,000. It is quite nice knowing that if we need more money it's there as we put all our savings into our house when we got here, it's also nice knowing if we want to pay more off we can, when we want and as little as the interest if needed.
Although for some it makes some sense to go that way, (especially if you are in a position to pay the principal down quickly) its worth noting that usually the interest rate is a few point higher on a line of credit compared to a standard term mortgage.

But, unlike a mortgage, you can pay the whole thing off without interest penaties in one go if you like, so ideal if you plan winning the lottery sometime soon
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Old Feb 24th 2006, 9:38 pm
  #21  
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Default Re: "Affordable" mortgage

Originally Posted by iaink
Although for some it makes some sense to go that way, (especially if you are in a position to pay the principal down quickly) its worth noting that usually the interest rate is a few point higher on a line of credit compared to a standard term mortgage.

But, unlike a mortgage, you can pay the whole thing off without interest penaties in one go if you like, so ideal if you plan winning the lottery sometime soon
It worked out cheaper for us, as we were getting quotes of 5 and 6% interest on a mortgage and having to pay back over $1300,00 per month, so we are paying less, with less interest % (you only pay interest on what you borrow) and seeing the loan amount go down every month
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Old Feb 25th 2006, 5:32 am
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Default Re: "Affordable" mortgage

But $2200 for three people...wow... That's a lot of booze...

I think this warrants a new thread.


Originally Posted by Souvenir
No. Two adults and a teenager. It is noticeable that our grocery bills drop dramatically during the Summer vacation, when teenager is not here.

That being said, we do eat well. Plus we buy our booze at the supermarket. Others may not be including that in their calculations.

My wife is also a clean freak. We spend a fortune on cleaning products.
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Old Feb 25th 2006, 5:00 pm
  #23  
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Default Re: "Affordable" mortgage

hey good people - I am seeing some bizarre interest rates being quoted here.

We have 3.5%, arranged before last two 0.25% rate hikes.



Rich.
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Old Feb 26th 2006, 11:12 am
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Default Re: "Affordable" mortgage

Originally Posted by Rich_007
hey good people - I am seeing some bizarre interest rates being quoted here.

We have 3.5%, arranged before last two 0.25% rate hikes.



Rich.
Is there a good place to check the interest rates across all providers in Canada?
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Old Mar 16th 2006, 12:28 am
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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.
This seems staggeringly high...my husband and I have a mortgage of $190,000 and are only paying $707.00 bi - monthly and this includes the equiv of property tax...what on earth are you paying in interest????
You should always consider your interest payments...sorry!
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Old Mar 16th 2006, 1:51 am
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Default Re: "Affordable" mortgage

Are we the only people paying the mortgage weekly? We were quoted for paying fortnightly and it saved us a lot of money. We then got them to quote for weekly and it saved even more.

Our mortgage has a repayment section and also a smaller 'line of credit' interest only bit. The interest only bit will be paid off almost immediately. The good thing about that portion of the mortgage (the interest only bit) is that if you ever need money in the future for major repairs, a car or you have lost your job etc, it can be drawn on at any time with no questions asked (at a very good interest rate). Call it an extra safety zone built in, just in case. But then we are quite conservative when it comes to wanting a buffer zone of money, we have what is in the bank and the line of credit we can draw down at any time.

I'm saying it will be paid off soon because we don't move into our house for 2-3 weeks, so at the moment we don't actually pay a mortgage - although it is signed up and ready to go.

We went through Scotiabank and were really impressed with them.


Originally Posted by ann101
This seems staggeringly high...my husband and I have a mortgage of $190,000 and are only paying $707.00 bi - monthly and this includes the equiv of property tax...what on earth are you paying in interest????
You should always consider your interest payments...sorry!
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Old Mar 16th 2006, 2:57 am
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Default Re: "Affordable" mortgage

There seems to be quite a bit of confusion on this thread in the sense of people comparing apples and oranges rather than apples and apples.

First, interest rates in Canada are still lower than in the UK. That means that any loan of any kind will cost less than the equivalent in the UK. Simple.

Second payments are dependent on two things. The interest rate and the term (time) over which the loan is calculated. Borrowing $100k over 25 years at 6% may well result in a lower payment than borrowing $100k over 15 years at 5%, but it will not result in a lower cost at the end of the day. It seems as if some people are only considering the payment and not the total cost over time. For example, someone questioned what the interest rate someone else had who said they were paying $850 bi-weekly, obviously they should also have asked over what period of time was the loan calculated.

The object of the game is to pay as much as you can afford at the lowest rate you can find. That results in the lowest total cost overall. Isn't that what everyone would want to achieve?

Finally, the frequency of payments has a compounding affect either on the payment amount or the total cost overall. In your case colsgirl, your weekly payments have been used to reduce the payment amount rather than the total cost over time. That happens because you will make 4 more payments per year than someone paying monthly. But rather than using it to reduce the payment amount, it could have been used to increase the annual payment by the amount of 4 weeks payments and therefore decrease the total cost over time. To really understand this you need to have someone run some figures for you to show you the effect that compounding has. Maintaining the weekly payment at a higher number for 52 weeks per year compared to a standard montly payment over the course of a 25 year mortgage could result in discharging the whole mortgage in say 23 years instead of 25 and a savings of 10s of thousands of dollars.

Paying off a mortgage is probably the easiest wise thing for an individual to do. Paying it off as quickly as possible is even wiser. Doing without a second TV to do that may seem like a hardship now but it won't in the end. Be prepared to pay 30% of your net income on a mortgage. Find the best rate and pay weekly. That's the cheapest (meaning lowest overall cost, not lowest payment) and fastest.
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Old Jun 27th 2006, 11:23 am
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Smile 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




Hi, I'd like to resurrect this old thread of mine again to see if I can get some more opinions. Thanks again to everyone who has already shared some pretty personal information. Some really good points raised already. Cheers

To summarize, what seems to be suggested from previous posters is that we should be looking to pay out between 20-30% on our net monthly income on mortgage & property tax payments, to still be able to have a decent standard of living without having to watch every cent. This is based on average costs of living for a family of 4 without any other major debt payments to think about.

When replying can I ask that posters indicate whether they are commenting on gross or net income and whether their % payments include property tax or just mortgage payments.

Thanks,

Roy
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Old Jun 27th 2006, 11:42 am
  #29  
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Default Re: "Affordable" mortgage

[QUOTE=glenlivet]



Hi, I'd like to resurrect this old thread of mine again to see if I can get some more opinions. Thanks again to everyone who has already shared some pretty personal information. Some really good points raised already. Cheers

This is a really good thread as it is exactly the sort of information which I too have been looking for. Well done for raising this.

Can I please also ask other members to give an estimate of what % should one budget for property taxes. I appreciate that this may differ according to areas and types of property but as a rule of thumb what would be a typical %

Cheers
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Old Jun 27th 2006, 11:56 am
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Default Re: "Affordable" mortgage

Hi,

I've calculated the property tax in Vernon, BC to be about 0.9% of the assessed value of the property. This is after taking account of an annual Home Owners Grant. Used the city authority's own website to calculate this so if you know where you're heading it might be worth trying this.

I had previously been advised that the property tax would be between 1.2% - 1.5%. If you're anything like me you'll want to over estimate your figures to be on the safe side.

Cheers,

Roy
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