Calgary Real Estate predictions?

[nik-]

Originally Posted by gladaki

He earn close to 75k$..so i guess getting mortgage is not a problem for him. Also he has no other debts

70% of a $75000 salary is a $650000 mortgage. There's no way a bank approves that mortgage for a $75000 salary.

[gladaki]

Originally Posted by nik-

70% of a $75000 salary is a $650000 mortgage. There's no way a bank approves that mortgage for a $75000 salary.

well may be its a less mortgage ...His house is close to 300k$. May be he not showing me what up is sleeve. Any way my point is he just got the job n end up buying the house. ...

[lorenavedon]

Originally Posted by gladaki

He earn close to 75k$..so i guess getting mortgage is not a problem for him. Also he has no other debts

lol yeah, cause you know, unemployment is just a construct only to be read about in fantasy books and heard in bed time stories. Seems completely irresponsible for a bank to lend money to somebody that wouldn't be able to continue to make payments with 6-8 months of unemployment. Oh wait, CMHC guarantees the banks have no losses only the citizens. Guess I'm insuring your friend

[username]

Originally Posted by nik-

70% of a $75000 salary is a $650000 mortgage. There's no way a bank approves that mortgage for a $75000 salary.

It would be 70% of 65% of 75,000 - we get taxed in Canada

That's still 2800 a month but I'm assuming that's for all his housing costs, not just mortgage.

Still outragous for someone only making 75K

[The Yen Man]

Originally Posted by gladaki

well may be its a less mortgage ...His house is close to 300k$. May be he not showing me what up is sleeve. Any way my point is he just got the job n end up buying the house. ...

Uh, I think your calculation's a little off.

Cost of house is $300K
5% Down is $15K
95% Mortgage is $285K

Run that through a mortgage calculator using 3.5% fixed on 25 years, and it comes up to roughly $660 biweekly payments.

Your friend who makes $75K annually gross should still take in roughly $50K net. Divide that by 26 pay periods, and it's around $1,900 net a paycheque. $660/$1900 is roughly 35%, not 70%.

[nik-]

Originally Posted by username

It would be 70% of 65% of 75,000 - we get taxed in Canada

That's still 2800 a month but I'm assuming that's for all his housing costs, not just mortgage.

Still outragous for someone only making 75K

http://www.cra-arc.gc.ca/esrvc-srvce.../pdoc-eng.html

$6250 gross a month
$4465 net
X .7
$3125

That's how I got to that number, that site is pretty accurate in the past for me.

[ranchlandsselling]

Originally Posted by bizaro86

Why do interest rates have to go up the next 5 years? People have been saying that for 5 years now, and it hasn't been true yet.

Examples: http://forum.calgarypuck.com/showpos...&postcount=290

http://forum.calgarypuck.com/showpos...&postcount=372

http://forum.calgarypuck.com/showpos...&postcount=682

I was pretty much the same, I figured rates would go up a bunch after all the money printing central banks did in 2008/2009. But rates are still wicked low, and the locked in fixed rate mortgage I took in 2008 turned out dramatically worse over the 5 years than the variable choice.

I didn't say they have to go up, I said as they rise. My opinion is they will rise. They already have from spring 2013 low of 2.79% and they've come back down to 3.19%, that's 14% higher than this time last year. In the summer it was 3.59% which was 29% higher than a few months earlier. So saying they won't go up is already wrong. They did and it was fast, happened over a month and then slowly retreated a bit.

It won't be linear, but if the US recovery is real Canada will start to feel the effects and our rates will slowly climb. There will be ups and downs, but in 5 years I'd put my bets on at least a 4.0% interest rate which is 43% higher than the low and 25% higher than today's best rates.

[darklord700]

I have paid less 1.75% for my mortgage before and now I'm paying 2.75%. I don't think I can get used to the idea of paying 4% for mortgage if that ever happens.

[ranchlandsselling]

Originally Posted by darklord700

I have paid less 1.75% for my mortgage before and now I'm paying 2.75%. I don't think I can get used to the idea of paying 4% for mortgage if that ever happens.

Sounds like you've been a variable rate person - but, there's the mentality that will be prevalent if/when rates rise. And it's only been 7 years max of these sub 5.0% rates, my fist mortgage was 5.89% and it wasn't THAT long ago.

[nik-]

My first 5 year term was 5.85. I'm at 3.09 now and it's hilariously different.

[Table 5]

Imagine being one of those guys in the 80s paying 20%. Even if the 90s it was over 10% at times.

[gladaki]

Originally Posted by Table 5

Imagine being one of those guys in the 80s paying 20%. Even if the 90s it was over 10% at times.

Buying house in 80's is much easier than now. Starting pays in oil and gas are good now days but still I find buying house is a distant idea for me.

[darklord700]

Deleted

[darklord700]

Back in the 80's, you probably made $40K and houses were like $80K so 2 times your salary.

Now, you make $80K and houses are $400K, 5 times your salary. I hope people take advantage of these historically low interest rates to pay down their mortgages instead of spending the savings.

[Calgary14]

Back in the 80s a lot of people forget about the high rates. Sure you could get a house for a cheap price. A brand new decent size house in Shawnessy sold for $70k including home and lot. But interest rates were extremely high. GICs paid 12.5% in 1983. Average mortgage rate around that time was 15%. So cheap houses with super high interest rates. It evens out compared to today's market

[Knut]

My grandparents built their house in 1955, in Wildwood, for $55,000. My parents bought it from them in 1988 for $120,000. The house now has an assessed value of over $700,000. Craziness.

[Jedi Ninja]

Originally Posted by Hesla

My grandparents built their house in 1955, in Wildwood, for $55,000. My parents bought it from them in 1988 for $120,000. The house now has an assessed value of over $700,000. Craziness.

That's a compounded annual rate of return of 4.4% since 1955. If they had put the money in the Dow instead, they'd have almost $1.8 million.

[Knut]

^ sure. But how much money in rent would they have paid over the years ?

[Mr.Coffee]

I went big and locked in for the long haul. It may have been a brutal decision but who knows, the rate I got for the next 10 yrs is decent so I figure what the hey, it's affordable and now I have no risk for the foreseeable future. Will I end up paying more? I dunno, maybe... whoever knows. It is sort of tough to see those 5 yr deals being offered slightly less than what I'm locked in at, but they aren't really that much less.

I think it probably comes down to how much I can pay down over the next few years too which I'll do my best with.

But yeah when I first started this home ownership stuff I was I think at like just under 6 so this is a nice new realm I'm in. Saving quite a bit now.

[calgarywinning]

I think you should apply as much as the saving's in paying down the mortgage in general, regardless of interest rate. Every dollar applied is directly applied to the principle and can dramatically reduce the interest amount paid to the bank regardless of rate.