Quote:
Originally Posted by Cowboy89
http://en.wikipedia.org/wiki/Irish_p...File:Fishy.jpg
https://www.vancity.com/Mortgages/Ty...PaymentHelper/
The first link is an advertisement for a Dublin bank in July of 2007 that encourages a 100% mortgage for first time home buyers. Today if you showed that ad to an Irish person, knowing what they now know gleaned from painful first hand experience, they would double face palm.
The second link is to Vancity where they essentially have a program that allows first time buyers to borrow 97.5% of the value of the property they wish to buy. Now sure, the 'soft landing' types will get into an argument of semantics about how underwriting standards are better here than they were in Ireland, that, hey someone who can scrape together 2.5% of a down payment is a better credit risk than someone who has to borrow a full 100%, hey it's insured by the government here in Canada, etc. etc. But the point that actually matters about the two examples is that buying something that costs hundreds of thousands of dollars and many multiples of annual income for 100% or 97.5% or 95% borrowing is generally a stupid risky financial decision. In aggregate, the Americans and the Irish now know this, Canadians do not.
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Why is the total % burrowed so important?
If I am able to hypothetically scrape up 500K and put that towards a million dollar home, am i some how better off than someone who only put down 5% on a 250K home?
I think the only thing that matters is how the debt is structured vs. the income of the home owner. If you make 2 or 3 times your mortgage payment in a month (for a normal term mortgage of course) but for some reason can't currently save your suggested down payment, you shouldn't buy a home?
Genuinely interested in opinions here as this is the position I am in. I can comfortably afford the mortgage I'm looking to get in to but i dont have the luxury of time to save up a hefty down payment. Even if you ignore the ridiculously low interest rates, I don't feel like I'm some how making a poor financial decision.