02sled Posted April 7, 2017 Share Posted April 7, 2017 3 hours ago, ArcticCrusher said: I am sure there are lots in that boat. Although, with borrowing rates this cheap, it can be carried. I don't see rates moving higher any time soon. With the minimum down payment being 5% theoretically his purchase price may have been about $840K or more. A mortgage at 2.5% on $800K amortized over 25 years with bi-weekly payments is $1655.76. Roughly $3311.52 per month.... damn scary. Now for the real scary part apparently for many. If the rates go up to 3.5% those bi-weekly payments jump to $1847.55. An increase of $191.79 every two weeks or approximately $383.58 per month more. How many with mortgage payments that high have an extra $400 a month laying around. Add to the equation that unless they have a 20% down payment they need to pay mortgage insurance. In this case about $31K added to the amortization. More than 700,000 Canadian borrowers could be facing payment shock on their debt obligations if interest rates rise by a quarter point, and that rises to as many as one million people should rates go up by 1 per cent, says a study by credit monitoring firm TransUnion. http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/canadian-borrowers-could-face-payment-shock-if-interest-rates-rise/article31838268/ Quote Link to comment Share on other sites More sharing options...
ArcticCrusher Posted April 7, 2017 Share Posted April 7, 2017 31 minutes ago, 02sled said: With the minimum down payment being 5% theoretically his purchase price may have been about $840K or more. A mortgage at 2.5% on $800K amortized over 25 years with bi-weekly payments is $1655.76. Roughly $3311.52 per month.... damn scary. Now for the real scary part apparently for many. If the rates go up to 3.5% those bi-weekly payments jump to $1847.55. An increase of $191.79 every two weeks or approximately $383.58 per month more. How many with mortgage payments that high have an extra $400 a month laying around. Add to the equation that unless they have a 20% down payment they need to pay mortgage insurance. In this case about $31K added to the amortization. More than 700,000 Canadian borrowers could be facing payment shock on their debt obligations if interest rates rise by a quarter point, and that rises to as many as one million people should rates go up by 1 per cent, says a study by credit monitoring firm TransUnion. http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/canadian-borrowers-could-face-payment-shock-if-interest-rates-rise/article31838268/ He should use a rate of 5% to see if he could carry it. Lots of dumb people out there, I do my best to try and not follow them. Quote Link to comment Share on other sites More sharing options...
02sled Posted April 7, 2017 Share Posted April 7, 2017 10 minutes ago, ArcticCrusher said: He should use a rate of 5% to see if he could carry it. Lots of dumb people out there, I do my best to try and not follow them. I agree... too many live pay cheque to pay cheque without any backup money in the bank or investments to draw on. A standard rule for lenders is that your monthly housing payment (principal, interest, taxes and insurance) should not take up more than 28 percent of your income before taxes. Using that $800K mortgage with payments of $1655.76 bi-weekly that's $43.049.76 a year. If that's 28% of the annual income. They would need a combined income of $155K per year. The average Ontario combined family income in 2014 was $78,790. About 1/2 of what is the minimum requirement to carry that $800K mortgage. Sure makes me glad I haven't had a mortgage in a very long time. Quote Link to comment Share on other sites More sharing options...
ArcticCrusher Posted April 7, 2017 Share Posted April 7, 2017 14 minutes ago, 02sled said: I agree... too many live pay cheque to pay cheque without any backup money in the bank or investments to draw on. A standard rule for lenders is that your monthly housing payment (principal, interest, taxes and insurance) should not take up more than 28 percent of your income before taxes. Using that $800K mortgage with payments of $1655.76 bi-weekly that's $43.049.76 a year. If that's 28% of the annual income. They would need a combined income of $155K per year. The average Ontario combined family income in 2014 was $78,790. About 1/2 of what is the minimum requirement to carry that $800K mortgage. Sure makes me glad I haven't had a mortgage in a very long time. They families making 78K are not going to be able to afford that so cupcake needs a reality check. But say two teachers with combined income of 200K can. Quote Link to comment Share on other sites More sharing options...
Platinum Contributing Member Blackstar Posted April 7, 2017 Platinum Contributing Member Share Posted April 7, 2017 3 hours ago, ArcticCrusher said: They families making 78K are not going to be able to afford that so cupcake needs a reality check. But say two teachers with combined income of 200K can. My thought too. Need to be teachers, firemen or cops to afford those payments.....lol Quote Link to comment Share on other sites More sharing options...
2strokemerc Posted April 7, 2017 Share Posted April 7, 2017 17 minutes ago, Blackstar said: My thought too. Need to be teachers, firemen or cops to afford those payments.....lol Or pilots, lawyers, doctors, FSers. Quote Link to comment Share on other sites More sharing options...
dirtybeacher Posted April 8, 2017 Author Share Posted April 8, 2017 So I hear it snowed in Ontario, that's unfortunate. 1 Quote Link to comment Share on other sites More sharing options...
scottyr Posted April 10, 2017 Share Posted April 10, 2017 On 4/7/2017 at 1:50 PM, 02sled said: I agree... too many live pay cheque to pay cheque without any backup money in the bank or investments to draw on. A standard rule for lenders is that your monthly housing payment (principal, interest, taxes and insurance) should not take up more than 28 percent of your income before taxes. Using that $800K mortgage with payments of $1655.76 bi-weekly that's $43.049.76 a year. If that's 28% of the annual income. They would need a combined income of $155K per year. The average Ontario combined family income in 2014 was $78,790. About 1/2 of what is the minimum requirement to carry that $800K mortgage. Sure makes me glad I haven't had a mortgage in a very long time. I couldnt sleep at night with an $800K mortgage. Quote Link to comment Share on other sites More sharing options...
Puzzleboy Posted April 10, 2017 Share Posted April 10, 2017 I could if the house was worth 4.0. It's getting extremely common now though. Quote Link to comment Share on other sites More sharing options...
ArcticCrusher Posted April 11, 2017 Share Posted April 11, 2017 12 minutes ago, Puzzleboy said: I could if the house was worth 4.0. It's getting extremely common now though. For sure, problem is when the home is only worth 900k and we are in a bubble. 1 Quote Link to comment Share on other sites More sharing options...
Puzzleboy Posted April 11, 2017 Share Posted April 11, 2017 We're still cheap compared to many comparable places though, and the foreign demand is only increasing. Quote Link to comment Share on other sites More sharing options...
scottyr Posted April 11, 2017 Share Posted April 11, 2017 The big problem is when people blow their brains out buying a house only to find out that the house doesnt appraise for anywhere close to what they offered and they suddenly need to come up with a bunch of cash to make the numbers work. This is happening pretty regularly in my area. Quote Link to comment Share on other sites More sharing options...
02sled Posted April 11, 2017 Share Posted April 11, 2017 It could be worse. Japan has multigenerational mortgages where you'll never pay it off. Your kids or perhaps grandkids finally do. Quote Link to comment Share on other sites More sharing options...
ArcticCrusher Posted April 11, 2017 Share Posted April 11, 2017 7 hours ago, 02sled said: It could be worse. Japan has multigenerational mortgages where you'll never pay it off. Your kids or perhaps grandkids finally do. You can't buy a car in japan unless you have a parking spot. Quote Link to comment Share on other sites More sharing options...
Puzzleboy Posted April 11, 2017 Share Posted April 11, 2017 Graduated licensing by motorcycle engine displacement, too. Quote Link to comment Share on other sites More sharing options...
Frostynuts Posted April 11, 2017 Share Posted April 11, 2017 1 hour ago, Puzzleboy said: Graduated licensing by motorcycle engine displacement, too. Ah ha, that explains why none of them can get past the 50 cc size. Their driving is terrible. 2 Quote Link to comment Share on other sites More sharing options...
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