I would think most would roll it into their mortgage at the first renewal.
This is the problem with this plan. A good chunk of the first five years of a mortgage goes to interest and not principal. After 5 years you all of a sudden have about the same amount mortgaged as when you started, but now you have only 20 years left on your mortgage, and it is now likely at a higher rate then when you started. Here come the payments you can now no longer afford…..
What is the interest rate the BC Libs charge after the five year grace period? What's the five year mortgage rate right now?
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After 5 years the interest rate becomes prime +.5%
Angela Calla, the mortgage lady on CKNW, explained that if you bought a $750,000 property and qualified for the max interest free loan, that you would be saving approx. $200 a month on your mortgage payment and subsequently making a $600+ loan payment. Not worth it in my books.
cant say im surprized those, banks have always been for people who have money not those that actualy you know need to borrow…
hate to say it…but here's your chance
This is the problem with this plan. A good chunk of the first five years of a mortgage goes to interest and not principal. After 5 years you all of a sudden have about the same amount mortgaged as when you started, but now you have only 20 years left on your mortgage, and it is now likely at a higher rate then when you started. Here come the payments you can now no longer afford…..
they just do another twentyfive year term and put themselves that much farther from having any significant equity in the home. payments don't have to go up.
they just do another twentyfive year term and put themselves that much farther from having any significant equity in the home. payments don't have to go up.
Unless the house falls in value and the bank requires additional capital to renew. But real estate always goes up so that's definitely not a problem.
they just do another twentyfive year term and put themselves that much farther from having any significant equity in the home. payments don't have to go up.
Correct payments don't have to go up, but you are now in a 30 year mortgage and even greater levels of debt. It just a terrible policy all around. Will be interesting to see how desperate first time homebuyers are, and how many in fact take the loan.
Seems "buy now or be priced out forever' wasn't just a sales ploy.
Seems "buy now or be priced out forever' wasn't just a sales ploy.
Forever is long time.
What happens when old people die and and leave housing stock, if first time buyers are totally and forever priced out?
Who is going to buy the house of the guy that wants to buy my house, if nobody can buy the condo from the girl who wants to buy that guy's house? First time buyers are crucial for upward mobility.
Anything that can't go on forever, won't. I think this new rule is a genuine sign that forever is running out of time.
there is always somebody and they just bought my mom's condo, a year ago my sister bought her condo on the same street in a buying frenzy by offering 9K over asking.
So we missed the peak and white rock RE is no longer the bidding/buying frenzy of one year ago, mom's place was 2 months on the market we dropped 12K ended up only 2k lower than we expected which is a pretty reasonable market activity
Correct payments don't have to go up, but you are now in a 30 year mortgage and even greater levels of debt. It just a terrible policy all around. Will be interesting to see how desperate first time homebuyers are, and how many in fact take the loan.
I'm willing to bet that many will go for it…most first time home buyers would be younger people and many simply don't understand how interest and loans work. It's pretty easy to have a rosy outlook on the future when you're getting out of an overpriced rental situation, too. Desperation is a bad card to hold..
… mom's place was 2 months on the market we dropped 12K ended up only 2k lower than we expected which is a pretty reasonable market activity
Nice work. Our place is getting looked at and some other places are selling in our price range which has left us with little competition so I think we are close, and it's clear there's still some action. I think this new deal for FTHBs is going to create some more action at the entry level in the spring, which will enable other sellers to move up the ladder. But I think this is just pulling in future demand, and will simply raise prices by the amount they are giving away pretty much immediately and cause problems when it runs out.
I'm willing to bet that many will go for it…most first time home buyers would be younger people and many simply don't understand how interest and loans work. It's pretty easy to have a rosy outlook on the future when you're getting out of an overpriced rental situation, too. Desperation is a bad card to hold..
I'm willing to bet you are right, and I suspect the demand for condos in the spring will reflect this. And if you were going to buy anyway you'd be stupid not to take it.
Somehow I got through high school knowing how to differentiate an equation but never once did cost/benefit or rent/own analysis, let alone what P/E stands for (phys ed, right?).
Somehow I got through high school knowing how to differentiate an equation but never once did cost/benefit or rent/own analysis, let alone what P/E stands for (phys ed, right?).
Bingo! One of the biggest failings of our education system. It could be argued that parents should be educating kids about that part of life, but a lot of them don't really understand how it all works either.
If someone was looking to get into a condo this Spring would there be any reason to take one of these loans if they already have a 20% down payment? Would there be overall savings on interest?
If someone was looking to get into a condo this Spring would there be any reason to take one of these loans if they already have a 20% down payment? Would there be overall savings on interest?
Potential headache in 5 years if you aren't prepared for it, but yes, you'd save the interest costs on up to 37K for five years from what I read. What's that, 1500/year?
Depending on your salary/tax situation I would look into putting 25K into your RRSP, then borrow from it through the standard first time homebuyer plan.
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