Quote:
Originally Posted by 4X4
With the money you are not paying into your mortgage, you can (theoretically) save up to $1000 per month. You put this money aside for a DP on a 2nd property. This is a grey area as you're supposed to have 25%... When you're married or you have a trusted companion, this is easily circumvented. But even if you were to actually save the 25%, it would take around 5 years to do so assuming you're acually putting away the grand that your neighbour Mr "I'm gonna pay off my mortgage is 15 years so that I don't ahve payments each month" is paying.
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Or if I was just renting I could save $2000 a month, buy a property with 25% down in 2 1/2 years, buy a 2nd property in 6 years, and be a slum landlord by the 25th year - as long as everything goes according to the best-case scenario. I'm not sure how this argument for having extra cash to spend on investing into real estate transforms a long-term mortgage in your place of residence into a good move considering you want cash to leverage; if that is your main focus, you want to live as cheaply as possible, as you make a lot more money on your investments than you ever will in appreciation of your home.
Most people get long-term mortgages because they can't afford shorter terms - that's why they get raped on the interest. The main reason they can't afford a shorter term is because they spend all their discretionary income, which means any potential savings aren't invested in anything other than big-screen TVs, cars and vacations. Sure it'd be great if they would invest it in real estate - but they won't.