What salary for $650,000 mortgage
Mar 12th 2015, 3:46 pm
#16
Proudly Scarberian
Joined: Aug 2014
Location: Scarberia
Posts: 2,196
Re: What salary for $650,000 mortgage
Also remember that you generally want to be paying more than the minimum repayment- if you mortgage to the max you can afford to repay, you're going to spend years spinning your wheels just paying off interest. Yeah, I made that mistake.
Mar 12th 2015, 3:54 pm
#17
Muskoka, Ontario
Joined: Aug 2013
Posts: 3,045
Re: What salary for $650,000 mortgage
We've just gone for a $615k house on a salary of over $100K but I did put down $160k (making a mortgage of $458k after adding COMPULSORY mortgage indemnity insurance) and I've still got an inherited apartment in the UK to sell, which will cover off about 60% of the mortgage.
5 year fixed rate of 2.74% (Scotiabank - these rates aren't advertised rates) gives $2108/month repayment on 25 year amortisation.
This is the upper limit of my comfort zone without my wife working and ignoring the UK property (cautious assumption), on the basis that at the end of the 5 year fix, rates could be double or more and there could be falls in house prices in the future.
You won't get amortisation of more than 25 years until, you get Citizenship iirc.
CMHC recommends your mortgage payment + property tax is not more than 35% of your Gross income.
5 year fixed rate of 2.74% (Scotiabank - these rates aren't advertised rates) gives $2108/month repayment on 25 year amortisation.
This is the upper limit of my comfort zone without my wife working and ignoring the UK property (cautious assumption), on the basis that at the end of the 5 year fix, rates could be double or more and there could be falls in house prices in the future.
You won't get amortisation of more than 25 years until, you get Citizenship iirc.
CMHC recommends your mortgage payment + property tax is not more than 35% of your Gross income.
Mar 12th 2015, 3:59 pm
#18
Forum Regular
Thread Starter
Joined: Jan 2015
Posts: 35
Re: What salary for $650,000 mortgage
We've just gone for a $615k house on a salary of over $100K but I did put down $160k (making a mortgage of $458k after adding COMPULSORY mortgage indemnity insurance) and I've still got an inherited apartment in the UK to sell, which will cover off about 60% of the mortgage.
We got a 5 year fixed rate of 2.74% (Scotiabank - these rates aren't the advertised rates) - this gives $2108/month repayment on 25 year amortisation.
This is the upper limit of my comfort zone without my wife working and ignoring the value of the UK property (ie cautious assumptions), on the basis that at the end of the 5 year fix, rates could be double or more and there could be falls in house prices in the future.
You won't get amortisation of more than 25 years until you get Citizenship iirc.
CMHC recommends your mortgage payment + property tax is not more than 35% of your Gross income (which equates to about 50% of net income after taxes).
There are reasons why many houses have legal (and illegal) secondary suites.....although we didn't go down that route.
We got a 5 year fixed rate of 2.74% (Scotiabank - these rates aren't the advertised rates) - this gives $2108/month repayment on 25 year amortisation.
This is the upper limit of my comfort zone without my wife working and ignoring the value of the UK property (ie cautious assumptions), on the basis that at the end of the 5 year fix, rates could be double or more and there could be falls in house prices in the future.
You won't get amortisation of more than 25 years until you get Citizenship iirc.
CMHC recommends your mortgage payment + property tax is not more than 35% of your Gross income (which equates to about 50% of net income after taxes).
There are reasons why many houses have legal (and illegal) secondary suites.....although we didn't go down that route.
Mar 12th 2015, 4:00 pm
#19
Concierge
Joined: Jun 2011
Location: Oakville, ON, CA
Posts: 8,320
Re: What salary for $650,000 mortgage
I don't want to post actual numbers, but I can post generally what we did...
Our mortgage pre-approval was done on only my husband's salary, and they approved us for a ridiculously high mortgage. Like, yeah, we could afford that, if we never turn on the heating or the lights and eat ramen noodles for the next 25 years.
The mortgage we took out was roughly 4.5x my husband's salary; 2.6x our combined salary. Our down payment was 35%. Interest rate is at 2.74% for a 5-year fixed, 25 year amortization.
We determined this to be affordable for us. Doesn't empty the bank account, is still achievable for any kind of leave or unemployment in the future, and still means we can put some money into savings or renovations each month.
It would have been really easy to go with the max the bank offered us, but we were sensible enough to know that number was complete insanity.
So you need to sit down and put a budget together and work out what's affordable for you. (Some people are happy to leave the lights off, wear a sweatshirt, and eat ramen noodles for 25 years!)
Our mortgage pre-approval was done on only my husband's salary, and they approved us for a ridiculously high mortgage. Like, yeah, we could afford that, if we never turn on the heating or the lights and eat ramen noodles for the next 25 years.
The mortgage we took out was roughly 4.5x my husband's salary; 2.6x our combined salary. Our down payment was 35%. Interest rate is at 2.74% for a 5-year fixed, 25 year amortization.
We determined this to be affordable for us. Doesn't empty the bank account, is still achievable for any kind of leave or unemployment in the future, and still means we can put some money into savings or renovations each month.
It would have been really easy to go with the max the bank offered us, but we were sensible enough to know that number was complete insanity.
So you need to sit down and put a budget together and work out what's affordable for you. (Some people are happy to leave the lights off, wear a sweatshirt, and eat ramen noodles for 25 years!)
Mar 12th 2015, 4:01 pm
#20
Muskoka, Ontario
Joined: Aug 2013
Posts: 3,045
Re: What salary for $650,000 mortgage
Withabix...I've been trying to work out how we have less of a mortgage than you on a cheaper interest rate and how our monthly costs are similar... But I have it now I think? Is yours just a monthly payment mortgage? As we are on a bi weekly mortgage...
Mar 12th 2015, 4:05 pm
#21
Joined: Sep 2008
Posts: 12,830
Re: What salary for $650,000 mortgage
Many don't seem to grasp, that at the end of the term, say 5 years, one has to renew the insurance and make sure you qualify for the new mortgage. Banks can refuse to renew if one does not meet the criteria.
Personally I always had an open mortgage, by and far the best and cheapest over the long term.
Mar 12th 2015, 4:07 pm
#22
Muskoka, Ontario
Joined: Aug 2013
Posts: 3,045
Re: What salary for $650,000 mortgage
I don't want to post actual numbers, but I can post generally what we did...
Our mortgage pre-approval was done on only my husband's salary, and they approved us for a ridiculously high mortgage. Like, yeah, we could afford that, if we never turn on the heating or the lights and eat ramen noodles for the next 25 years.
The mortgage we took out was roughly 4.5x my husband's salary; 2.6x our combined salary. Our down payment was 35%. Interest rate is at 2.74% for a 5-year fixed, 25 year amortization.
We determined this to be affordable for us. Doesn't empty the bank account, is still achievable for any kind of leave or unemployment in the future, and still means we can put some money into savings or renovations each month.
It would have been really easy to go with the max the bank offered us, but we were sensible enough to know that number was complete insanity.
So you need to sit down and put a budget together and work out what's affordable for you. (Some people are happy to leave the lights off, wear a sweatshirt, and eat ramen noodles for 25 years!)
Our mortgage pre-approval was done on only my husband's salary, and they approved us for a ridiculously high mortgage. Like, yeah, we could afford that, if we never turn on the heating or the lights and eat ramen noodles for the next 25 years.
The mortgage we took out was roughly 4.5x my husband's salary; 2.6x our combined salary. Our down payment was 35%. Interest rate is at 2.74% for a 5-year fixed, 25 year amortization.
We determined this to be affordable for us. Doesn't empty the bank account, is still achievable for any kind of leave or unemployment in the future, and still means we can put some money into savings or renovations each month.
It would have been really easy to go with the max the bank offered us, but we were sensible enough to know that number was complete insanity.
So you need to sit down and put a budget together and work out what's affordable for you. (Some people are happy to leave the lights off, wear a sweatshirt, and eat ramen noodles for 25 years!)
Mar 12th 2015, 4:08 pm
#23
Binned by Muderators
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
Re: What salary for $650,000 mortgage
We've just gone for a $615k house on a salary of over $100K but I did put down $160k (making a mortgage of $458k after adding COMPULSORY mortgage indemnity insurance) and I've still got an inherited apartment in the UK to sell, which will cover off about 60% of the mortgage.
...
You won't get amortisation of more than 25 years until you get Citizenship iirc.
...
You won't get amortisation of more than 25 years until you get Citizenship iirc.
Mar 12th 2015, 4:10 pm
#24
BE Forum Addict
Joined: Aug 2013
Location: Maple Ridge, Super Natural British Columbia
Posts: 2,071
Re: What salary for $650,000 mortgage
I actually get paid weekly (yes, really!!!) even though I'm salaried!
Mar 12th 2015, 4:12 pm
#25
BE Forum Addict
Joined: Aug 2013
Location: Maple Ridge, Super Natural British Columbia
Posts: 2,071
Re: What salary for $650,000 mortgage
I think the indemnity is mandatory if you haven't got PR or even in early PR...
Mar 12th 2015, 4:12 pm
#26
Binned by Muderators
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
Re: What salary for $650,000 mortgage
Times have changed. Six years ago one client was trying to sell a 1,200 sf house on a half acre lot in (admittedly rural) SK. The house was well maintained. They struggled to get $30,000. (The comma is in the right place.)
Mar 12th 2015, 4:17 pm
#27
Muskoka, Ontario
Joined: Aug 2013
Posts: 3,045
Re: What salary for $650,000 mortgage
I'm going to point out to my husband how lucky he is to have such a frugal wife
as it's becoming clear I am ultra cautious!!
Mar 12th 2015, 4:19 pm
#28
Muskoka, Ontario
Joined: Aug 2013
Posts: 3,045
Re: What salary for $650,000 mortgage
Not mandatory... We're on a TWP and we didn't go over the amount required loan to value so didn't need it.
Mar 12th 2015, 4:22 pm
#29
Dive Bar Drunk
Joined: Nov 2006
Location: Toronto
Posts: 8,649
Re: What salary for $650,000 mortgage
TD recently offered me a mortgage of 5 x's my salary and a 35 year term (which I thought weren't allowed any more).
Talk of interest rate rises in the US. A fool would buy a property now and certainly a condo so be careful.
Mar 12th 2015, 4:22 pm
#30
Concierge
Joined: Jun 2011
Location: Oakville, ON, CA
Posts: 8,320
Re: What salary for $650,000 mortgage
It's true- what the banks will offer here is ridiculous... I would never dream of maxing the mortgage like that in the UK but I guess everyone has a different risk tolerance. Mine is pretty low...plus we want to ski and go explore (read escape the winter in search of sun) ...
I think a lot of people are just like "OMG THE BANK SAYS I CAN HAVE A MORTGAGE FOR X, THAT IS AWESOME!" and then stop it there. And as others have pointed out, the very low interest rates right now are sort of skewing things a bit - what happens if interest rates go up to 5% in 5 years time, and you were already living cheque-to-cheque on a 3%ish mortgage? Yeeeeeah....
(FYI, "you" above just means "one", not any "you" in particular! Just to be clear!
)