30 and 35 year mortgages

[Sample00]

Originally Posted by Dominicwasalreadytaken

So Sample, this question is probably better suited for pm, but would a lending company be willing to offer a short term interest only mortgage for a second property?

honestly,
I dont see why not. I think I would need to have a few more details on the deal and stuff to say for sure, but it sounds reasonable.

[DementedReality]

Originally Posted by Dominicwasalreadytaken

.... He might have been in debt up to his eyeballs ...

i guess there is my problem. i cant sleep if i owe money and i dont know enough about investing or trust financial "experts" enough to borrow for investing. granted, i understand the difference between consumer debt (bad) and investing debt, i just would be a wreck wondering if it all went wrong!

i guess i will be on the slow but steady and never filthy rich plan.

interesting discussion though.

[photon]

Originally Posted by Rhettzky

You might change your tune when interest rates climb. I think you guys have to seriously consider locking in at an interest rate now and staying away from these deals. It's obvious that interest rates are starting to climb and I've heard from some sources that they could be as high as 8% within a year. We locked our house down at 4.7% last year and this year it's already looking at around 5.3 - 5.7% (we're considering moving again).

Even if I had a mortgage (which I don't want) I'd still be in short term rates. I'd rather deal with the fluctuations in rates and keep the rates lower than lock in.

Plus with my HELoC I can do things like making my mortgage tax deductable. As long as my investing + tax benifits beats my prime - 0.5 rate on my loc why would I lock in my rate?

I don't ever plan on paying it off! Heck I don't ever plan on making more than the interest only payments except for lump sums to get the tax benifits.

[V]

Originally Posted by DementedReality

i guess there is my problem. i cant sleep if i owe money and i dont know enough about investing or trust financial "experts" enough to borrow for investing. granted, i understand the difference between consumer debt (bad) and investing debt, i just would be a wreck wondering if it all went wrong!

i guess i will be on the slow but steady and never filthy rich plan.

interesting discussion though.

I was like that no more than 8 months ago. I just wanted to pay down my mortgage, and live the debt-free life.

Then I started talking to this guy at work, read a few books, and I was hooked. I'm still in the process of figuring out how everything works, but as of right now I have the money available, a good chunk of the know-how, and an incredible urge to get moving.

It's not the idea of becoming filthy rich that gets me going, though. Sure, I'd like to be well off, but really I just want to be comfortable. It's mostly the fact that I want something to replace my income through work, as I think I'll be 6 feet under in 5 years if I don't get out from under this stress.

Plus the idea of making these deals just fascinates me. This is the first time I've ever done anything that resembles work that I can really sink my teeth into and enjoy.

[NuclearFart]

Originally Posted by photon

Plus with my HELoC I can do things like making my mortgage tax deductable. As long as my investing + tax benifits beats my prime - 0.5 rate on my loc why would I lock in my rate?

From whom and how did you this get awesome rate on a LOC? The best I can find right now is prime from RBC or National Bank
________
ISRAELI COOKING

[Tower]

I don't care about my "mortgage" I'd just pay the intertest and put the money into an investment. When I'm retired I don't care where I live. In fact I know it won't be in a city like Calgary. I will be a small town and a small house as I'll rarely be there. I have no interest in giving the bank money faster. I'd rather pay me. If I finally default due to hight intrest rates... I'll have a lot of money invested outside my home.

There are reasons for doing it one way and the other. You can pay the bank $200 per month or $1000 and pay off a house sooner. Invest $800 a month, the difference you save from intrest only, using your money for 'you' and watchout!!! Dominicwasalreadytaken's idea is also a different way of thinking.

[Shazam]

30+ year mortgages in the US are common because down there, interest on mortgage payments is tax deductible.

At the start of your mortgage, the vast majority of your mortgage payment is interest. This results in many people paying very little tax as a result.

[go iggy]

I'm doing the M1 thing and it's a new way to think about investing. We've grown up to think that we are to have a mortgage and once we pay that off in 25- 30 years then thats when we'll be rich and be able to do the things in life that we want.

But it's not like that anymore. It took me a year to really think about this and finally I did.A lot of banks have simalar offers but I think that Manulife bank is the only one that does it all. I don't work there or anything like that. I just signed up this week and feel good about doing it. Go to there web site www.manulifebank.com and click on the M1 calculator and see for yourselves. I can pay my house off in 8 years instead of 25 because the money that gets deposited into the account reduces your intrest thus saving you money( I will save $117,000 in interest). I could talk forever but just try the calculator.

As for the borrowing to invest? I took out $50,000 loan today to invest. The intrest you pay is tax deductable too. Better for me to make money then the banks.

thanks
sorry for the long post.

[photon]

Originally Posted by NuclearFart

From whom and how did you this get awesome rate on a LOC? The best I can find right now is prime from RBC or National Bank

Bank of Montreal. Let me know if you can get it, because I suspect that it was an accident that I was able to get it.

[firebug]

Let me weigh in on a few topics.

1) Borrowing to invest can be a good idea, however make sure you get some professional advice and are not just sinking it into stock tips that you got somewhere on the internet. Increasing your leverage (borrowing) increases your returns but also increases your risk so appropriate portfolio management is key.

2) If these topics are fearful for you, do some research read books like Rich Dad Poor Dad or The Wealthy Barber. You can start many things very simply and with very little money. Considering the ages of many on this board, putting away even $50/month could provide significant income when you are ready for retirement.

3) Don't sell yourselves short! $1 or $2MM is not rich, it is only what I would consider just confortable. I am fortunate through work to be able to associate with many wealthy people (>$20MM) and they are likely no more intelligent than you are. They merely have been smarter with their money.

4) A persons wealth is determined not by how much they earn but how much they save (invest) verses spend. Put less effort into 'looking' rich and more into 'being' rich.

5) Interest only mortgages. My parents bought a house in Lake Bonavista in the early '70s for about $22,000. If they had paid interest only on it and never a dime in principle (investing it instead) would they really be that stressed now about their $22,000 mortgage on a $500,000 property?

~bug

[Sylvanfan]

Originally Posted by firebug

Let me weigh in on a few topics.

5) Interest only mortgages. My parents bought a house in Lake Bonavista in the early '70s for about $22,000. If they had paid interest only on it and never a dime in principle (investing it instead) would they really be that stressed now about their $22,000 mortgage on a $500,000 property?

~bug

Jeez, you know....that line right there puts it into perspective. Real estate will have it's spikes and valley's, but over a 30 year period a piece of property will go up in value. Certainly something to think about. I always held the illusion that I'd pay down a nice chunk of my house within 5 years and than use the equity in it to borrow to try and get 3 additional houses to be used as revenue property's, get those paid for in like 15 years, own 4 houses, and than maybe leverage another 2-3 houses off of those. That way when I was like 60 I'd have 5-6 rental property's that I could use as an income source. I've always liked the idea of a revenue property because at the worst someone else is paying off money that you borrowed, and you still have the potential for the asset to appreciate. But perhaps theres a better way to do things.

Any more advanced books on this subject that you finaciers reccommend?

[V]

The thing is, I think equity is pretty important to have just to get started. It's tough to borrow significant amounts of money from the bank if you don't have equity, and you can always consider paying off your personal mortgage as a bit of an investment. For example, I've calculated with my interest rate on my mortgage that a 5,000 lump sum payment on my mortgage yields about a 5.2% return anually, for at least a few years. It's a low return to be sure, but I think of it as getting a small return as well as setting myself up for something better in a year or two. It's hard to make good money on 200 bucks a month, so may as well slap it on the mortgage and wait for that equity to grow to a point where I can actually use it.

As for good books to read, there's a million and one out there on real estate investing. Some are good, some are not, it's up to you take take out of them what makes sense and go with it.

Rich Dad Poor Dad was the first one I read, and it completely changed the way that my mind worked towards investing. His examples aren't really all that applicable, as you'd need 2 full cups worth of luck to pull a lot of that off, but I found the book fantastic for the philosophy behind what he does. Changed the way I think about things.

[DementedReality]

Originally Posted by go iggy

I'm doing the M1 thing and it's a new way to think about investing. We've grown up to think that we are to have a mortgage and once we pay that off in 25- 30 years then thats when we'll be rich and be able to do the things in life that we want.

But it's not like that anymore. It took me a year to really think about this and finally I did.A lot of banks have simalar offers but I think that Manulife bank is the only one that does it all. I don't work there or anything like that. I just signed up this week and feel good about doing it. Go to there web site www.manulifebank.com and click on the M1 calculator and see for yourselves. I can pay my house off in 8 years instead of 25 because the money that gets deposited into the account reduces your intrest thus saving you money( I will save $117,000 in interest). I could talk forever but just try the calculator.

As for the borrowing to invest? I took out $50,000 loan today to invest. The intrest you pay is tax deductable too. Better for me to make money then the banks.

thanks
sorry for the long post.

interesting for sure .... i checked it out and i wonder what our resident experts think of this. i am trying to wrap my brain around it.

for instance, i noticed that they have a variable and a fixed portion of the loan, how is this determined?

[V]

It looks good to me, although there seem to be a lot of fees for the bank account. I'd also like to see the math behind their calculator, because I don't really believe all of it. The nice thing is that it's an automatic HELOC, which is nice. Seems to be at prime, too.

It seems as though you can take a portion of the loan and make the interest rate fixed. I think you can choose just how much you want to have fixed.

[theikon]

with 6 billion dollars of unvested options in this city, there is only one direction the housing market is headed. north.

[Sample00]

just thought I would post this email I got today, because the question came up earlier in the thread...

GE Money introduces 40-year amortization mortgage

New feature lowers monthly payments, assists in managing cash flow


Toronto – May 1, 2006 GE Money, the Canadian consumer-lending unit of General Electric Company (NYSE: GE), today launched a 40-year amortization option to its mortgages - the first lender to do so in Canada. This option is designed to help combat rising home prices and enable individuals to enter the housing market, while helping to manage cash flow.

Currently, GE Money mortgages are offered via brokers in Ontario, Alberta and British Columbia.

“Offering a broader list of products and options is part of our growth strategy,” says Rick Lunny, president of GE Money Mortgages. “A 40-year amortization follows our goal of providing mortgage products to those for whom the rising cost of real estate or their credit situation is a barrier to entering the market.”

GE Money mortgages are primarily directed to consumers who may find it difficult to qualify for traditional bank-originated mortgage loans. These include individuals who have recently immigrated to Canada, are self-employed, or have less-than-perfect credit.

“The GE Money 40-year mortgage helps bring down the customer’s monthly payment which gives many new homebuyers the option to enter the housing market sooner, purchase a larger home, or a home in a market where real estate prices are rising rapidly,” adds Lunny. “It can also act as a short-term solution to assist individuals through difficult financial times.”

The first in Canada to offer both 30- and 40-year amortizations, GE Money introduced its mortgages in October, and plans to offer them nationwide by the end of 2006.

Speed, simplicity and consistency are key features of the GE Money approach. Brokers receive loan approvals in as little as a few seconds and always under two hours, and funds are delivered in as little as five days. The offering also features a unique, risk-based pricing model that promises consistent responses, using a simple, web-based application tool.

Mortgage brokers or prime lenders interested in offering GE Money mortgages can visit www.gemoney.ca for more information or contact:

[Sample00]

and as a side note...

as of May 31,2006, I will no longer be brokering mortgages.

Am too busy with other ventures to carry on. The ROTI (return on time invested) is not as good as the other businesses and quite frankly, am running out of hours in the day.

[Reaper]

40 year mortgages? It's only a matter of time before multi-generational mortgages come to North America.

[Red]

Interesting thread.

Debt is good? I guess my "old school" mentality needs an adjustment.

It would be interesting to compare notes a few years down the road. Right now it looks like everybody here will be doing great on their investments. The reality is that 90% of them will most likely spend that extra ca$h on iPods, Flames gear and other consumer crap. That's human nature, so don't get offended. We've seen it happen again and again.
It's the same thing when people make a budget and see great amount of savings at the end of the year. Most times they have big fat 0 at the end because it takes great discipline to save/invest. Other times they accumulate debt on top of that, because after all, debt is good.


Sorry for the lecture, but test your discipline before making major, long term commitments because we all know that talk is cheap and investments always look great on paper.

[photon]

Debt is good. But you need to read the rest of my statement... Could be summed up as "Good debt is good." Debt is only good if that debt is working for you in some way. Debt should be offset by assets. an iPod or consumer crap aren't assets; they don't increase (or maintian) their value and they don't earn you income.

Most people don't look at their lives as a balance sheet, and they should.

But I agree, you have to be disciplined and ensure that you balance between saving for the future and living for now. With our stuff most of what we earn goes back into investing (saving for the future), but we always make sure to pay ourselves something; some sort of reward for good behaviour.