Mortgage stress test
Apr 14th 2018, 4:54 pm
#1
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Mortgage stress test
An article on mortgage stress tests. Shows the min income required with a 20% down paymemt to pass stress test.
Does appear there is 1 place in Canada we could pass the test with 20% down according to the articles map.
Now not sure we could maintain BC level income there though.
https://globalnews.ca/news/4139837/h...edium=Facebook
Does appear there is 1 place in Canada we could pass the test with 20% down according to the articles map.
Now not sure we could maintain BC level income there though.
https://globalnews.ca/news/4139837/h...edium=Facebook
Apr 16th 2018, 10:34 pm
#2
Tea Drinker
Joined: Nov 2006
Location: Kamloops, BC
Posts: 5,387
Re: Mortgage stress test
Who has $30,000+ in their savings account for a 20% down payment these days?
I remember saving up £5,700 for a 10% down payment on my 1st house in the UK, but that was in 1995.
My Son doesn't stand a chance to get on the property ladder in Vancouver, not a damn chance.
I remember saving up £5,700 for a 10% down payment on my 1st house in the UK, but that was in 1995.
My Son doesn't stand a chance to get on the property ladder in Vancouver, not a damn chance.
Apr 16th 2018, 11:56 pm
#3
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Joined: Feb 2013
Location: BC, Canada
Posts: 3,874
Re: Mortgage stress test
I do think the stress test is a good idea ............ it will stop people overloading themselves in debt.
There was the horrendous time back around 1981 when mortgage interest rates went as high as 20+%, and people just had to walk away from their houses. One guy walked away from his house across the street when the rate reached 15% ......... he'd been in the house about 18 months.
It took a couple of years for the house to sell.
We locked in a 2 year mortgage at 13%, having seen it rise over the previous 2 years from about 6%. The 20% rate was reached during our locked-in period, and had fallen back down to 13% by the time we had to renew, so we were lucky.
We never had a mortgage interest rate below 7% at any time, and that was through a credit union where we had to own shares and have a small balance in an account, and therefore slightly lower than a mortgage through a bank or mortgage company.
There was the horrendous time back around 1981 when mortgage interest rates went as high as 20+%, and people just had to walk away from their houses. One guy walked away from his house across the street when the rate reached 15% ......... he'd been in the house about 18 months.
It took a couple of years for the house to sell.
We locked in a 2 year mortgage at 13%, having seen it rise over the previous 2 years from about 6%. The 20% rate was reached during our locked-in period, and had fallen back down to 13% by the time we had to renew, so we were lucky.
We never had a mortgage interest rate below 7% at any time, and that was through a credit union where we had to own shares and have a small balance in an account, and therefore slightly lower than a mortgage through a bank or mortgage company.
Last edited by scilly; Apr 17th 2018 at 12:00 am.
Apr 17th 2018, 12:39 am
#4
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Re: Mortgage stress test
Only the top income earners can buy in Vancouver, when condos are 400-500k they are no longer starters to get onto a property ladder which really does not exist in Vancouver anymore.
We have a few units in our building for sale, 600k for a 1 bedroom, and on top of the mortgage there is a 300-400 monthly strata fee, insanity.
Is there a difference between high mortgage payment or high rent, at the end of the day people are over extended renting or owning because wages are too low and cost of living too high, something has to give at some point.
We have a few units in our building for sale, 600k for a 1 bedroom, and on top of the mortgage there is a 300-400 monthly strata fee, insanity.
Is there a difference between high mortgage payment or high rent, at the end of the day people are over extended renting or owning because wages are too low and cost of living too high, something has to give at some point.
Apr 17th 2018, 7:40 pm
#5
Resident Maple Leaf Lush
Joined: Oct 2008
Posts: 1,745
Re: Mortgage stress test
Getting even a minimum downpayment, let alone the 20% to avoid mortgage insurance is hard enough, depending on the price of the property of course. "Move somewhere cheaper then!" is the cry that comes from many. Thing is, not always possible to do that when you have commitments that require you to be located in a specific locale.
The seriously annoying thing is that mortgage repayments wouldn't stress things, but that's a moot point due to not having the required amount for the downpayment.
The seriously annoying thing is that mortgage repayments wouldn't stress things, but that's a moot point due to not having the required amount for the downpayment.
Apr 17th 2018, 7:52 pm
#6
Joined: Feb 2006
Location: Red Deer, Alberta
Posts: 10,612
Re: Mortgage stress test
My Stepson in the UK has almost 30k GBP saved, he can't get a mortgage for the type of property he wants. I keep saying to my husband, well, when is he going to realise he can't get straight into a house with a garden and garage and maybe he should be looking at a flat and renting a garage until he can move up the ladder. Maybe it's just cozier living at home with Mum and staying with girlfriend once or twice a week!
I think stress tests are a good idea. Before buying our current house we went to see how much we could get as we were going to a house auction, we were offered $300k more than either of us were comfortable with. So many people go for the highest amount.
I think stress tests are a good idea. Before buying our current house we went to see how much we could get as we were going to a house auction, we were offered $300k more than either of us were comfortable with. So many people go for the highest amount.
Apr 17th 2018, 8:17 pm
#7
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Re: Mortgage stress test
Issue with down payment savings is that rents are so high, and income not so high, that so much goes towards rent, that once everything in done and paid, there is nothing left to save. Saving is only possible when there is excess income available.
We could own and pay way less in housing in many small towns in BC, but the down payment and income is the wall that keeps up from being able to we apparently can't afford a $700/month mortgage even though we pay 1,750/month in rent.
Vancouver of course has no property ladder really, one needs a pretty high and unrealistic income to even buy a condo these days.
The US is looking nicer and nicer, far easier to get into a house there so moving there may be our only option.
If only my other half was the favorite child.
We could own and pay way less in housing in many small towns in BC, but the down payment and income is the wall that keeps up from being able to we apparently can't afford a $700/month mortgage even though we pay 1,750/month in rent.
Vancouver of course has no property ladder really, one needs a pretty high and unrealistic income to even buy a condo these days.
The US is looking nicer and nicer, far easier to get into a house there so moving there may be our only option.
If only my other half was the favorite child.
Last edited by scrubbedexpat091; Apr 17th 2018 at 8:20 pm.
Apr 17th 2018, 10:39 pm
#8
Joined: Feb 2006
Location: Red Deer, Alberta
Posts: 10,612
Re: Mortgage stress test
I think it's about time that rent payments were taken into account rather than a deposit. A deposit is no guarantee that you can make payments but if you have a great rental payment history then you should be able to get a mortgage of similar or lower repayments.
Apr 18th 2018, 3:50 am
#9
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Location: SW Ontario
Posts: 19,879
Re: Mortgage stress test
Ohh just found this for Hamilton - who knew? https://www.hamilton.ca/social-servi...stance-program
The Homeownership Down Payment Assistance Program is for low to moderate-income residents who rent in Hamilton, and want to buy a home.
including BC JS!! [url]https://www.bchousing.org/housing-assistance/bc-home-partnership[/url Oh damn, so sorry - they have just ended the program
BC Home Owner Mortgage and Equity Partnership
BC Home Owner Mortgage and Equity Partnership (BC HOME Partnership) assists residents of British Columbia who are eligible first-time homebuyers by providing repayable down payment assistance loans.
Last edited by Siouxie; Apr 18th 2018 at 4:08 am.
Apr 18th 2018, 3:27 pm
#10
Joined: Feb 2006
Location: Red Deer, Alberta
Posts: 10,612
Re: Mortgage stress test
Trouble with rent to own (UK) as I understand it is you need a deposit, you buy half the house and you rent the other half with the option of being able to buy more 'shares' in the future, you are at the mercy of the rent portion increasing. This is how my niece and fiance are accommodated. They had in excess of 20k GBP saved. What I would like to see is 0% down for a mortgage based on your rent payment history. I think it's something that used to be possible.
Apr 18th 2018, 3:35 pm
#11
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Joined: Aug 2005
Location: South of Calgary
Posts: 13,374
Re: Mortgage stress test
Trouble with rent to own (UK) as I understand it is you need a deposit, you buy half the house and you rent the other half with the option of being able to buy more 'shares' in the future, you are at the mercy of the rent portion increasing. This is how my niece and fiance are accommodated. They had in excess of 20k GBP saved. What I would like to see is 0% down for a mortgage based on your rent payment history. I think it's something that used to be possible.
The issue with 0% down is that, if you cannot make the payments and if the lender needs to foreclose, they may not get their money back after they have had to pay to kick you out. The downpayment is to protect them and, if no downpayment is made, you are unlikely to find many lenders that are willing to lend the money.
Apr 18th 2018, 5:01 pm
#12
Joined: Feb 2006
Location: Red Deer, Alberta
Posts: 10,612
Re: Mortgage stress test
That is how we bought our house in the UK. Saved a deposit, bought the house and moved up the ladder a few years later.
The issue with 0% down is that, if you cannot make the payments and if the lender needs to foreclose, they may not get their money back after they have had to pay to kick you out. The downpayment is to protect them and, if no downpayment is made, you are unlikely to find many lenders that are willing to lend the money.
The issue with 0% down is that, if you cannot make the payments and if the lender needs to foreclose, they may not get their money back after they have had to pay to kick you out. The downpayment is to protect them and, if no downpayment is made, you are unlikely to find many lenders that are willing to lend the money.
I can see youngsters pinning their hopes on their parents homes, but with extended care becoming so expensive, parents homes are quite often fore fitted to reverse mortgages or to pay for extended care.
Apr 18th 2018, 5:14 pm
#13
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Re: Mortgage stress test
The system we have is not really sufficient anymore with the way prices are going.
When a condo is going to run $400,000 or more hard to say condos are a starter home or an entry to the ladder.
20% of 400k is not exactly small change.
When a condo is going to run $400,000 or more hard to say condos are a starter home or an entry to the ladder.
20% of 400k is not exactly small change.
Apr 18th 2018, 7:14 pm
#14
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Joined: Apr 2009
Location: SW Ontario
Posts: 19,879
Re: Mortgage stress test
Trouble with rent to own (UK) as I understand it is you need a deposit, you buy half the house and you rent the other half with the option of being able to buy more 'shares' in the future, you are at the mercy of the rent portion increasing. This is how my niece and fiance are accommodated. They had in excess of 20k GBP saved. What I would like to see is 0% down for a mortgage based on your rent payment history. I think it's something that used to be possible.
What rent to own means?
When you buy your home under a rent to own purchase program, you pay a monthly rent, and a part of this rent is credited as the down payment for your house purchase when you buy the home at some point in the future. This is a simple concept which allows you to own the house you desire, despite having a poor credit rating, or insufficient money for down payment. In a Rent to Own Program in Ontario, you get the opportunity to accumulate your down payment while you live in the house you desire to own. Rent to own a home in Ontario program is designed as a proactive step which allows you to have a home despite hurdles you may face from a Bank, from having Bad Credit or lack of Down Payment.
Apr 18th 2018, 10:47 pm
#15
Joined: Feb 2006
Location: Red Deer, Alberta
Posts: 10,612
Re: Mortgage stress test
Not the same here. https://homeownersoon.com/rent-to-own-in-ontario
What rent to own means?
When you buy your home under a rent to own purchase program, you pay a monthly rent, and a part of this rent is credited as the down payment for your house purchase when you buy the home at some point in the future. This is a simple concept which allows you to own the house you desire, despite having a poor credit rating, or insufficient money for down payment. In a Rent to Own Program in Ontario, you get the opportunity to accumulate your down payment while you live in the house you desire to own. Rent to own a home in Ontario program is designed as a proactive step which allows you to have a home despite hurdles you may face from a Bank, from having Bad Credit or lack of Down Payment.
What rent to own means?
When you buy your home under a rent to own purchase program, you pay a monthly rent, and a part of this rent is credited as the down payment for your house purchase when you buy the home at some point in the future. This is a simple concept which allows you to own the house you desire, despite having a poor credit rating, or insufficient money for down payment. In a Rent to Own Program in Ontario, you get the opportunity to accumulate your down payment while you live in the house you desire to own. Rent to own a home in Ontario program is designed as a proactive step which allows you to have a home despite hurdles you may face from a Bank, from having Bad Credit or lack of Down Payment.