About one out of every five home loans at three big Canadian banks are now negatively amortizing, which happens when years get added to the payment term of the original loan because the monthly payments are no longer enough to cover anything but the interest.
You have to be mindful of ending up underwater, but otherwise it’s not much different than renting – without all of the baggage of renting that sees people want to own.
Unless monthly payments on renting from the bank are lower than renting from someone else it’s a worse deal. If you rent you don’t need to worry about things like replacing roof, windows, etc.
Also, if you rent you’re more free to pick up and leave vs. being tied to a mortgage.
In the past when. I’ve done this calc renting was worth it till you’d lived at a place for about 5 years. Don’t think this flat statement is true even now
It can, if you make good money, says 6000$ after taxes per month, you can rent at 1500$ and invest 2 or 3k per month and it can be better than having a mortgage for a big house and paying like 4k/month, I think.
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> variable rate loans with fixed payments that lead to negative amortizations shouldn’t be allowed at all
I agree with that, it does not make sense really
You have to be mindful of ending up underwater, but otherwise it’s not much different than renting – without all of the baggage of renting that sees people want to own.
Unless monthly payments on renting from the bank are lower than renting from someone else it’s a worse deal. If you rent you don’t need to worry about things like replacing roof, windows, etc.
Also, if you rent you’re more free to pick up and leave vs. being tied to a mortgage.
Renting is usually a better deal, but that’s not why you might choose to own.
In the past when. I’ve done this calc renting was worth it till you’d lived at a place for about 5 years. Don’t think this flat statement is true even now
It can, if you make good money, says 6000$ after taxes per month, you can rent at 1500$ and invest 2 or 3k per month and it can be better than having a mortgage for a big house and paying like 4k/month, I think.