[Serious] Banking on your home resale price to retire? - Canadian Chat

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Gone Premium join:2011-01-24 Fort Erie, ON kudos:3 Reviews: ·Start Communicat..	reply to Juggernaut Re: [Serious] Banking on your home resale price to retire? said by Juggernaut: Hopefully, that is the case. With today's volatile markets, I'm not so sure. Well, you can't keep giving away money for free forever, but at the same time one would hope that lessons were learned 30 years ago when interest rates were in the 20-30% range. But Mike2009 is very correct, while it would certainly throw a curve a modest interest rate increase will not be the end of the world for most people.
	to forum · permalink · 2012-09-23 21:16:43 ·
Juggernaut Irreverent or irrelevant? Premium join:2006-09-05 Kelowna, BC kudos:2	I'm not so confident. Many people live close to the bone these days. -- Better to have it and not need it, then need it and not have it.
	to forum · permalink · 2012-09-23 21:42:01 ·
Mike2009 join:2009-01-13 Ottawa, ON kudos:3 1 edit	Those who have overextended themselves financially to keep up with the Joneses are the ones who will suffer when the rates do go up. Those of us who live modestly and have financial options will continue to live the way we are living now.
	to forum · permalink · 2012-09-23 21:44:13 ·
Juggernaut Irreverent or irrelevant? Premium join:2006-09-05 Kelowna, BC kudos:2	Quite true. I owe a few hundred on my CC, and that's it. My debt will remain as low as I can keep it. I like zero, preferably. -- Better to have it and not need it, then need it and not have it.
	to forum · permalink · 2012-09-23 21:59:01 ·
Sukunai Premium join:2008-05-07 kudos:1 Reviews: ·ELECTRONICBOX ·TekSavvy DSL	reply to lugnut The trick is to rent, and to live on the bottom rung of the ladder and learn to actually like the bottom rung. Once you get skilled at making the bottom rung comfortable the only problem is sleeping with all the noise from people falling off the higher rungs hitting the ground and making loud splat sounds. I might be on the next rung up, not sure. But I am certainly no where near my brother who is up so high I can't even see his rung.
	to forum · permalink · 2012-09-24 08:43:01 ·
yoyomhz join:2003-02-15 Beverly Hills, CA	said by Sukunai: The trick is to rent, and to live on the bottom rung of the ladder and learn to actually like the bottom rung. Another trick is to be a small farmer, and have a garden, and learn to never eat out in restaurants, never to do ANYTHING. If you can take vacations every five years, you can subsidize the produce you grow (apples) so that you can still afford to stay in business, while selling your product at a loss.
	to forum · permalink · 2012-09-24 10:44:37 ·
Bob Account deleted join:2012-07-22 New Jersey Reviews: ·Optimum Online	reply to Gone said by Gone: For what it's worth, mortgages in Canada operate far differently from in the US. Not only are they much harder to obtain - especially now, with the recent changes - but the whole interest rate trap is prohibited from existing like it did in the US. I'm curious what you mean by "interest rate trap". Fixed-rate mortgages in the US are just that - the rate is fixed for the entire life of the loan. For example, my bank has a 30 year fixed rate loan at 3.625%. And the rate will remain at 3.625% for the entire 30 year term. Plus, there's no pre-payment penalty. Sure there were a lot of problems, but they were people who overextended themselves, or refinanced to get cash from their equity (almost always a bad idea).
	to forum · permalink · 2012-09-24 11:52:03 ·
Gone Premium join:2011-01-24 Fort Erie, ON kudos:3 Reviews: ·Start Communicat..	said by Bob: I'm curious what you mean by "interest rate trap". Fixed-rate mortgages in the US are just that - the rate is fixed for the entire life of the loan. For example, my bank has a 30 year fixed rate loan at 3.625%. And the rate will remain at 3.625% for the entire 30 year term. Plus, there's no pre-payment penalty. Do you guys not have introductory rates, balloon payments and all sorts of things that are a foreign concept to a Canadian mortgage customer?
	to forum · permalink · 2012-09-24 11:58:23 ·
Bob Account deleted join:2012-07-22 New Jersey Reviews: ·Optimum Online	said by Gone: Do you guys not have introductory rates, balloon payments and all sorts of things that are a foreign concept to a Canadian mortgage customer? Yeah, but they're not mandatory or the only types of mortgages. They have specific purposes for certain types of purchases, and should only be used by sophisticated purchasers. Most mortgages are fixed-rate for the length of the loan, with no pre-payment penalty. For example, I got a 30 year fixed-rate loan. After 12 years (18 years to go), I refinanced with a 15 year loan to get a lower rate and to knock 3 years off the term. (Refinancing is like a whole new loan. The old loan is paid off without penalty and the new loan starts with its own terms.) So I've always had fixed-rate loans, with no change in rates for the entire life of the loan. Your mortgages can go up in interest rate every few years? That sounds pretty unfair ("We own over half your house and now you have to pay us more money! Pay or get out!" Sounds like extortion.) I don't think I'd want one of those.
	to forum · permalink · 2012-09-24 12:09:40 ·
elwoodblues Elwood Blues Premium join:2006-08-30 HarperLand Reviews: ·Cybersurf Intern..	We used to have fixed rates my folks bought their house with a 25yr 6% mortgage, that didn't change either. Now days, typical terms are 1-10yrs with the interest rate varying depending on the term. But 30yr fixed rate mortgages in Canada? Not a chance in hell. -- No, I didn't. Honest... I ran out of gas. I... I had a flat tire. I didn't have enough money for cab fare. My tux didn't come back from the cleaners. An old friend came in from out of town. Someone stole my car. There was an earthquake.......
	to forum · permalink · 2012-09-24 12:14:25 ·
EUS Kill cancer Premium join:2002-09-10 canada	reply to Bob Thankfully we can renew every few years, else I wouldn't be @ 2.25% right now, I'd be stuck with my starting rate of 4.59% -- ~ Project Hope ~
	to forum · permalink · 2012-09-24 12:15:19 ·
EUS Kill cancer Premium join:2002-09-10 canada	reply to lugnut I don't know one person who views their primary residence as an investment. 2nd and 3rd rental properties as income generating, sure. -- ~ Project Hope ~
	to forum · permalink · 2012-09-24 12:18:29 ·
Gone Premium join:2011-01-24 Fort Erie, ON kudos:3 Reviews: ·Start Communicat..	reply to Bob said by Bob: Yeah, but they're not mandatory or the only types of mortgages. They have specific purposes for certain types of purchases, and should only be used by sophisticated purchasers. Those kind of mortgages aren't legal in Canada, so there's no way for a mortgage company to prey on someone desperate to buy a house with a mortgage that is 0.5% for the first few years and then shoots up to some unreasonable rate with a balloon payment after that. It was those kind of mortgages that caused the housing collapse in the US. In Canada, ours has different causes, and the feds are trying to nip it in the bud before it pops like it did in the US.
	to forum · permalink · 2012-09-24 12:19:41 ·

Bob Account deleted join:2012-07-22 New Jersey Reviews: ·Optimum Online	reply to EUS said by EUS: Thankfully we can renew every few years, else I wouldn't be @ 2.25% right now, I'd be stuck with my starting rate of 4.59% We can do the same thing (by refinancing), but it's under control of the homeowner and not the bank. They cannot make my payment go up.
	to forum · permalink · 2012-09-24 12:24:46 ·
Bob Account deleted join:2012-07-22 New Jersey Reviews: ·Optimum Online	reply to Gone OK, thanks. I was just wondering what you were referring to. It should be noted that the smart people in the US get fixed-rate loans. There are many other mortgage products available, and some people got mortgages which were entirely unsuitable for them, e.g. - »en.wikipedia.org/wiki/Negative_amortization The only "interest rate trap" here is one that someone chooses to get stuck in.
	to forum · permalink · 2012-09-24 12:33:12 ·
capdjq RIP my friend Premium join:2000-11-01 Coastie	I'm thinking of giving my two kids a head start in life so they can continue debt free. I've already paid their University education (4 years). They are on their second year. Now I'm thinking about selling my house and giving them a substantial down payment on their houses. Depending on how much I can sell maybe even purchasing outright for them. Then buying myself a cheaper condo . I don't need the space. I had a tough upbringing in foster care. I am making sure they don't go through what I experienced. Its much more difficult now and housing is the biggest expense. -- "The world is a dangerous place. Not because of the people who are evil; but because of the people who don't do anything about it."
	to forum · permalink · 2012-09-24 13:18:25 ·
Bob Account deleted join:2012-07-22 New Jersey	It's important that they have their own financial responsibilities and not just have everything handed to them. Let them buy their own houses.
	to forum · permalink · 2012-09-24 13:23:45 ·
Gone Premium join:2011-01-24 Fort Erie, ON kudos:3 Reviews: ·Start Communicat..	reply to Bob said by Bob: OK, thanks. I was just wondering what you were referring to. It should be noted that the smart people in the US get fixed-rate loans. There are many other mortgage products available, and some people got mortgages which were entirely unsuitable for them, e.g. - »en.wikipedia.org/wiki/Negative_amortization The only "interest rate trap" here is one that someone chooses to get stuck in. The problem is that when you're talking low income people and companies lying to them that it is possible for them to buy into the American Dream of Home Ownership, they probably aren't savvy enough to know they're being sold snake oil that will come back to bite them in the ass. I see this no different than telemarketers scamming the elderly, because the mortgage company selling these mortgages to these people knew damn well that they were unviable and would lead to financial ruin. That's why this is one situation where regulation should prevent stuff like this from occurring.
	to forum · permalink · 2012-09-24 13:41:31 ·
Gone Premium join:2011-01-24 Fort Erie, ON kudos:3 Reviews: ·Start Communicat..	reply to Bob said by Bob: It's important that they have their own financial responsibilities and not just have everything handed to them. Let them buy their own houses. If he has the capability, all the power to him. I would love to be able to do the same thing 20-30 years from now for my kids.
	to forum · permalink · 2012-09-24 13:42:09 ·
elwoodblues Elwood Blues Premium join:2006-08-30 HarperLand Reviews: ·Cybersurf Intern..	reply to EUS said by EUS: Thankfully we can renew every few years, else I wouldn't be @ 2.25% right now, I'd be stuck with my starting rate of 4.59% You were probably lucky, most banks want interest differential payments now. the money they'd "lose" by allowing you to renew at a lower rate. This 3 months interest business is pretty much gone. -- No, I didn't. Honest... I ran out of gas. I... I had a flat tire. I didn't have enough money for cab fare. My tux didn't come back from the cleaners. An old friend came in from out of town. Someone stole my car. There was an earthquake.......
	to forum · permalink · 2012-09-24 14:08:39 ·

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