Canadians naive about how long they’ll be in debt

[llama64]

When we went for our mortgage, they offered us a max of 375k. We were about 30k in debt (student loans, credit line) already and our house hold income was around 75k (mine being contract and thus non existant to the bank). Every day I'm glad we didn't overstep our actual means and take that mortgage (we settled on 240k with 5% down - oh 2009). Meant we had money to actually live a lifestyle as we wanted rather then being "house poor". Being "house poor" is one of the dumbest concepts I've ever heard of.

(helps that we bought a place that is more then enough for what we wanted and exactly where we want to live. Also helps we can walk to everything so transit got cut out of the equation. Dunno why people live outside the core - Beltline is the shiznizz)

Few years later - household income has gone up quite a bit, and our monthly payments have actually shrunk as debt loads keep getting reduced. Just gotta keep the eye on the long term prize and not get tempted into spending all the extra monthly income we have now.

[chemgear]

Originally Posted by V

You gotta make fotze-type money if you want your mortgage gone by 35.

Well the survey capped out at just 100,000 if I recall correctly. I was always curious of the distribution above that threshold. I'm assuming that there are people here that sit 200k, 300K, 400k+

[tvp2003]

Originally Posted by AMG_G

Mine will be done March next year I will be 39. Wife and 2 kids, paid off mdx and C63 so no car payments, maxed resp, tfsa and rrsp. I bought in 2003 with a 197k mortgage and 25% down. Been increasing my payments 20% whenever I could. Would have finished my mortage in 7 years if I didn't have a fast car vice. We chose to live in our modest home while all friends and siblings went full ###### on the cheap credit. My mortgage balance as of today is ~28k...my siblings are north of 500k.

Wow, you're putting down over $4k a month on your mortgage (I'm guessing at this point it's almost all principal versus interest)? Or does that include a lump sum (i.e. tax return) as well. In any event, that's quite the feat -- by the time you're paid out you'll have some serious cash flow to play with

[flylock shox]

Most of my friends in their mid-30s haven't even started with a mortgage yet. Mind you, that's the nature of the beast in Vancouver. By the time you've got enough income to afford a mortgage, the property you can afford a mortgage for is too small for two people, and certainly no use for the kids you're probably going to want to fill it with. Not so easy when the cheapest house in the city is half a mil.

Vancouver is just ridiculous...

[AMG_G]

Originally Posted by tvp2003

Wow, you're putting down over $4k a month on your mortgage (I'm guessing at this point it's almost all principal versus interest)? Or does that include a lump sum (i.e. tax return) as well. In any event, that's quite the feat -- by the time you're paid out you'll have some serious cash flow to play with

Yup the wife says she can already see the 911 Turbo in the garage . But lately I am on a living with less means more kick. The CP average income x two is great.

[kevman]

http://xkcd.com/946/

[Rathji]

I bought when I was over 30 (and before the crash). No way I see the end of my mortgage before I am 50.

[Oil Stain]

I guess I'm one of the crazy in debt Canadians. I still have around $330k left on my mortgage. If I keep up my payments and don't make any principal payments I will be 46 before I am mortgage free.

I think I am pretty comfortable with that though. I don't have any consumer debt, and I don't feel the need to pay down my mortgage as aggressively as possible. I'd like to buy a franchise or side business in the next couple of years and for that I will need liquid assets more then equity.

[Tinordi]

No debt, 100K in savings. No mortgage. I'm also a dink.

[rayne008]

to add a little balance for all the others out there...

300k mortgage, credit card debt, car loan, wife's tuition, and child support payments!
We're managing and are doing ok, but this grind is wearing me out.

[polak]

Originally Posted by Tinordi

No debt, 100K in savings. No mortgage. I'm also a dink.

Please don't tell me you have 100k just sitting in a bank account.

Also, can I have some money?

[calgaryrocks]

saving up for a house, we want to buy one that we can live in for 30 years and raise our kids. this makes it difficult to save up our goal of 20% (goal is $100k). over 50k in stocks and a few grand in savings/chequing, so we still have a ways to go, but 2 years is our hope, 24k in debt at 0% interest on a car purchase also

[Hack&Lube]

I took a $100,000 line of credit and put it toward the down-payment of the mortgage. Inspired or madness?

[MarchHare]

Originally Posted by Hack&Lube

I took a $100,000 line of credit and put it toward the down-payment of the mortgage. Inspired or madness?

Isn't that illegal? I thought you could not use borrowed money for a down-payment.

My parents gave me $10k to help with the down-payment when we bought our home. The bank required them to sign forms clearly identifying this as a gift and not a loan that had to be re-paid.

[chemgear]

Originally Posted by MarchHare

Isn't that illegal? I thought you could not use borrowed money for a down-payment.

I'm not sure if it's outright illegal - the experience/impression that I have is that it isn't a hard and fast outright rule. (Turning a blind eye kind of thing?)

For what it's worth, the cashback zero percent mortgages are finally starting to disappear in Canada. Or maybe not, who knows.

http://www.canadianmortgagetrends.co...-payments.html

http://www.canadianmortgagetrends.co...on-at-cus.html

[Hack&Lube]

If it helps you put in a 20% down payment, then you can avoid CMHC mortgage loan insurance costs. I also got $6000 in GST rebates.

It's not illegal and kosher with the bank if you are not hiding that fact. If the bank authorizes both and you sign a document attesting that the funds are not owed to any third party loans, it works.

[DownhillGoat]

Originally Posted by Hack&Lube

It's not illegal and kosher with the bank if you are not hiding that fact. If the bank authorizes both and you sign a document attesting that the funds are not owed to any third party loans, it works.

-borrowing funds
-declaring funds are not borrowed

I'm not expert, but doesn't that fall under the realm of mortgage fraud?

[flamesaresmokin]

Originally Posted by Hack&Lube

I took a $100,000 line of credit and put it toward the down-payment of the mortgage. Inspired or madness?

I'm also 99.9% sure its illegal to pull funds from another lender in order to place as a down payment. Maneuvers such as this are exactly why the economy will inevitably fail again.

[flamesaresmokin]

Originally Posted by Hack&Lube

If it helps you put in a 20% down payment, then you can avoid CMHC mortgage loan insurance costs. I also got $6000 in GST rebates.

With the price of homes in Calgary its not really realistic for two first time buyers to come up with 75-100k in cash for a down payment that will enable them to avoid the hefty cmhc payments. Even if you're doing really well it get's more unreasonable as you're likely purchasing a larger, more expensive home and that 20% further increases.

Unless you're a dual income couple that has been living under a rock for 10 years you really have no shot at avoiding the payments.

[Cecil Terwilliger]

Regarding H&L's down payment.

Typically you'll sign a gift document (if you told them the money was a gift, duh) stating that the money doesn't have to be repaid and something about the 3rd party stuff but unless the FI made you sign a document specifically saying that you didn't borrow for the downpayment then you're fine.

They would only be concerned if you lied and hid the fact that you had a line of credit in the first place. You likely signed some sort of document that listed all of your assets and liabilities. Failure to disclose a $100k LOC would be a big deal.

Although any FI that can't put two and two together and realize that you have a maxed out $100k LOC and 2 days later $100k magically appeared doesn't sound like a very good FI in the first place.


AFAIK it isn't illegal but I'm not 100%. Also I'm assuming that this is from an unsecured line of credit. If it was from an equity take out from another asset that's a different story.