Quote:
Originally Posted by photon
There's very little sub-prime mortgages in Canada. A 40 year / 0 down mortgage to a qualified borrower still accounting for their debt servicing ratio, credit history, ability to pay is VASTLY different than lending a mortgage that GREW over time rather than being paid down to a borrower with no credit history and little income.
Subprime refers to the borrower, not the mortgage.
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The point of a down payment is so that if a property's value goes down and the borrower defaults, there's enough equity left that the bank minimizes their losses in a foreclosure. Where's the cushion on a 40/0? A 40/0 500K mortgage @ 5% after four years results in an equity position of 18K.