30 and 35 year mortgages

[shane_c]

I heard a while ago that CMHC was going to start allowing 30 and 35 year ammortizations. Does anyone know of any lending institutions that are offering this as an option now?

[I-Hate-Hulse]

There are a fair number of interest only mortgages out there right now too.

Contact a mortgage broker *coughsample00* for info on who's offering what right now.

[mykalberta]

It boggles the mind why someone would want something that long.

For me, for 220K for a 10k, amortized at 20 years, the interest along per month is almost what I currently pay in rent.

You are maybe saving yourself $200 per month but in the end you will have 5 - 10 years more of interest - crazy.

Crazy.

MYK

[shane_c]

Originally Posted by mykalberta

It boggles the mind why someone would want something that long.

To have a lower mortgage so we might actually be able to get into a house since the prices of them are going up faster than our incomes.

[CrzyCanuck]

I can't wait until people start defaulting on mortgages, and I can pick up a few rental houses cheap. Maybe in 2011....

[shane_c]

Originally Posted by CrzyCanuck

I can't wait until people start defaulting on mortgages, and I can pick up a few rental houses cheap. Maybe in 2011....

That would be nice. I really wish the market would crash. It's great for everyone that's in a house now or selling and watching the value soar. But for the first time home buyer it's making it impossible to even get in the market. The minimum 5% downpayment keeps getting more and more as the prices go up. Over the last year the prices for the house we're looking at have gone up almost $100,000.

[V]

Originally Posted by mykalberta

It boggles the mind why someone would want something that long.

This is exactly what I'm looking for, especially the only interest mortgages. If I'm only buying a house so that I can flip it in a year, why do I care how much principal gets taken off? The difference in interest is pretty much negligible, and this makes it a lot easier for me to net a positive cash flow through that year.

[V]

Originally Posted by CrzyCanuck

I can't wait until people start defaulting on mortgages, and I can pick up a few rental houses cheap. Maybe in 2011....

Oh, I can't wait. You know the other shoe just has to drop eventually, and when it does I'll be waiting. For right now, I just want to do the quick turn-around investments so that I don't get too deep, and when the market collapses I'll hopefully have most of my principal mortgage paid off, so I'll have loads of money to play with.

That's the plan, at least. Who knows, maybe the market crashes, I end up unemployed, and can only watch the action from the sidelines.

[photon]

Originally Posted by Dominicwasalreadytaken

This is exactly what I'm looking for, especially the only interest mortgages. If I'm only buying a house so that I can flip it in a year, why do I care how much principal gets taken off? The difference in interest is pretty much negligible, and this makes it a lot easier for me to net a positive cash flow through that year.

I agree, we use an interest only LoC on our primary residence as well for this reason; I might want to get money out to invest rather than simply pay it down. With interest only I have the option. Pay interest only and use that money elsewhere that will grow faster than I can pay down my mortgage, or pay more than interest only if I want to make it more like a traditional PI payment.

[ken0042]

I crunched some numbers using the mortgage calculator. From what I can see on a $200K mortgage at 6% interest you would save $90 per month to extend it from 25 years to 30 years.

Now for somebody like Dominic who is looking to flip a place; it's fine. However if the difference between a 25 and 30 year mortgage is the breaking point between being able to afford a place or not, consider what will happen if interest rates go up to 8%; which is quite possible within the next 5 years.

[Nabber]

Genworth Financial is offering these 30-35 year mortgages to their clients. I sat in a meeting about it a couple mondays ago and it seems like a very good alternative to the first time home buyer to help get them into a house, I'm actually considering doing it myself. The surcharge from what I can rememer was around .2 percent on your loan for the 30 year mortgage and I think .5 for the 35 year one. Definitely check with a mortgage broker regarding this cost, but hey if it saves you money per month then why not? it's not like most people stay in their homes for 30 years anymore anyways.

Here's a link about it:
http://agonist.org/canuck/20060319/t...ived_in_canada

[I-Hate-Hulse]

I looked into the HELOC (Home equity line of credit) products that are out there and it looks like a good product to make your money in your place more liquid. You can even fix a portion of your principal at fixed rates to make it less risk adverse.

That said, I'd have to pay 3 months interest to break my current term, and it's not worth that to gain that flexibility.

[V]

Yeah, I've gotta look into that HELOC thingy myself. It'd be a shame to watch my equity go up and up and up, and not do anything with it. I've looked at the Manulife One product, and that's exactly what I'm looking for. I imagine there would be a number of different places that I could go to to get the same product.

I've got a year left on my 5 year fixed rate mortgage. I wonder if it would still cost me 3 months of interest to break that mortgage.

[troutman]

50 year mortgages in UK? 100 in Japan?

http://news.bbc.co.uk/1/hi/business/2027576.stm

Mortgages in the UK might have to double in length to 50 years if repayments are to remain within the reach of normal homebuyers, a leading mortgage broker has warned.


While the half-century mortgage may sound scary, Japan's ludicrously expensive property market is even more extreme.

There, near-zero interest rates have made little difference to the cost of housing, and some mortgages come with terms as long as 100 years.

Borrowers never in fact pay off the principal, leaving the property in the hands of the lender and the mortgage in the hands of the children.

http://news.bbc.co.uk/1/low/health/2029066.stm

As house prices soar, more and more people are finding it hard to get a foothold on the property ladder.


Some lenders are now talking about offering 50 or even a 100-year mortgages to enable people to buy a home.
But there are fears that having this financial millstone around our necks beyond retirement age could have a detrimental effect on our health and that of our children.

[albertGQ]

Originally Posted by I-Hate-Hulse

I looked into the HELOC (Home equity line of credit) products that are out there and it looks like a good product to make your money in your place more liquid. You can even fix a portion of your principal at fixed rates to make it less risk adverse.

That said, I'd have to pay 3 months interest to break my current term, and it's not worth that to gain that flexibility.

I heard from a very reliable source that ATB Financial is offering HELOC's at a rate of prime - 0.51% during their spring campaign

Some of you guys may want to check it out.

[photon]

Nice! My HELoC is at prime - 0.5%, and I was sure my bank was totally mistaken when they offered it because no one else I have talked to could get one or had heard of one.

[V]

So do you have to get a HELOC with the bank that your mortgage is with? Or can you shop around to look for the best deal?

[socalwingfan]

Originally Posted by fotze

I think those really long mortgages are common in the US. I think you have to do it in some cases in the high end areas like NY or San Fran.

I work in the mortgage industry here - 30 year loans are the normal, we just started accepting 40 year mortgages a couple of months ago.

[DementedReality]

i am wondering, honestly, why you would want to have debt?

for instance, if i owe no money, other than my mortgage, what does having a good rate HELOC do for me?

is it better to borrow than spend your own cash? maybe i dont get it, but at least I dont have any debt! although, i would like to hear from some of our financial people the value of cheap equity secured debt.

[I-Hate-Hulse]

Originally Posted by Dominicwasalreadytaken

So do you have to get a HELOC with the bank that your mortgage is with? Or can you shop around to look for the best deal?

Nope, you can break your term mortgage with your existing mortgager and jump to a new one......at a penalty. In my case the roughly $2,000 it would cost me to have a HELOC isn't worth it. Technically even on a normal mortgage you can refinance so it's not completely impossible to borrow against your equity.

Demented Reality - It's quite simple really. Borrow money cheap and make sure you get a return that's higher than the rate of interest you pay.