COVID and the housing market | Page 15 | GTAMotorcycle.com

COVID and the housing market

mimico_polak said:
I’ve got to figure this **** out. Gimme the TL:DR version?
Click to expand...

National-Bank-All-In-One-Smith-Manoeuvre.gif



The current low interest rates environment makes this even more juicy.
 
GreyGhost said:
You borrow to invest using equity in your home to get a lower interest rate. Interest on money borrowed to invest is tax deductible. That pushes your mortgage interest to before tax dollars and hopefully your investment grows to get you even further ahead.
Click to expand...
So I’d need to refinance at renewal time I guess. It would cost me to break the terms now. So 3.5 more years of cranking it until the first renewal.

And I guess the money can’t be in registered accounts (RSP/TFSA, etc)
 
mimico_polak said:
So I’d need to refinance at renewal time I guess. It would cost me to break the terms now. So 3.5 more years of cranking it until the first renewal.

And I guess the money can’t be in registered accounts (RSP/TFSA, etc)
Click to expand...
You can just HELOC it if you wanted. Sure you pay a higher rate, but pre-tax interest plus growth. Before doing it consult someone that knows the details not just random people on GTAM. Governments have a history of freaking out about some of these maneuvers and someone that deals with them often can help you comply with todays interpretation (eg. is it worth keeping the smith money in a separate account, can it go into a registered account, etc).
 
If interest rates went up maybe 2-3% a lot of people will be under water. Especially all the young people that bought a house and used any extra cash to upgrade their kitchen or vehicle instead of plunking it down on the mortgage.
 
mimico_polak said:
So I’d need to refinance at renewal time I guess. It would cost me to break the terms now. So 3.5 more years of cranking it until the first renewal.
Click to expand...
We just renewed with our single-line lender (MCAP) after just over a year in on a 5-yr fixed, and the penalty was still a lot less than the 1.25% drop in rate saves us when you start to factor interest savings (payments are similar, but we're hitting the principal much quicker). There's also a way to renew and then break to reduce the penalty to three months interest if you're with a chartered bank that has brutal penalties, but I'm less familiar with that approach. A friend just did it, so I would be happy to put you in touch with the broker who walked him through the process.
 
timtune said:
If interest rates went up maybe 2-3% a lot of people will be under water. Especially all the young people that bought a house and used any extra cash to upgrade their kitchen or vehicle instead of plunking it down on the mortgage.
Click to expand...
This is a huge problem for the overall economy. There's a very good chance we see runaway inflation post-Covid as all the folks suddenly stop saving, and the BoC will have their hands tied on raising rates because they'll be terrified of triggering a crash based on mortgages and variable rate debt. They reduced rates expecting a long contraction, and instead there's been growth. They had pegged 2023 as the earliest they'd raise rates, but that may change significantly if growth continues.
 
timtune said:
If interest rates went up maybe 2-3% a lot of people will be under water. Especially all the young people that bought a house and used any extra cash to upgrade their kitchen or vehicle instead of plunking it down on the mortgage.
Click to expand...
When when when /\/\/\/\
 
timtune said:
If interest rates went up maybe 2-3% a lot of people will be under water. Especially all the young people that bought a house and used any extra cash to upgrade their kitchen or vehicle instead of plunking it down on the mortgage.
Click to expand...
The first batch of people that realize what is happening will be ok. Prices have risen dramatically since they bought so they can afford to sell for slightly under market to quickly unwind their precarious position while keeping the equity. Of course this starts a spiral as more people do it. The person hanging on and seeing I'd they can make it work may find themselves properly underwater gt the time they decide to pull the plug.
 
GreyGhost said:
The first batch of people that realize what us happening wi be ok. Prices ha e risen dramatically since they bought so they can afford to sell dor slightly under market to quickly unwind their precarious position while keeping the equity. Of course this starts a spiral as more people do it. The person hanging on and seeing I'd they can make it work may find themselves properly underwater gt the time they decide to pull the plug.
Click to expand...

You know what this reminds of? ♦️ ♦️ ♦️ ♦️ ? ? ? ?

Just sayin'...

"HODL THE LINE, RETARDS!!!!"
 
I see these interest rates and complain to my wife that we don't have any debt!
Everything is paid for and it's killing me not to be able to take advantage of these rates. That said there's nothing for sale - at a reasonable price. I start thinking about property out east (maritimes) but we won't realistically move so whats the point. Life is good why bring on more headaches?
 
something overlooked might be that most young people or first time buyers cant buy the expensive houses, so from their perspective, anything under 500k is selling before they can pick up the phone, or getting bid on by 50 people, and/or always selling for over asking or in bidding wars...can make things seem worse and more bleak than they actually are...

whereas I imagine larger/more expensive houses probably arent all that hot, dont imagine a line up of bidders coming in for a house thats close to 2 million or over, but maybe Im wrong who knows
 
bigpoppa said:
something overlooked might be that most young people or first time buyers cant buy the expensive houses, so from their perspective, anything under 500k is selling before they can pick up the phone, or getting bid on by 50 people, and/or always selling for over asking or in bidding wars...can make things seem worse and more bleak than they actually are...

whereas I imagine larger/more expensive houses probably arent all that hot, dont imagine a line up of bidders coming in for a house thats close to 2 million or over, but maybe Im wrong who knows
Click to expand...
House near me was listed at 2.4 (800K to 1.2M over comps) and had four buyers at the table so it went for list in a week. Similar problems, bigger numbers. People made so much on previous properties that they are coming in with a war chest and think they cant lose on their investment so they dont mind paying what is required to get what they want. Not for me, but it works for a lot of people. The seller of that house was in it for two years. They were in their previous house 8 years. They probably made close to 800K tax free on each house.
 
GreyGhost said:
You can just HELOC it if you wanted. Sure you pay a higher rate, but pre-tax interest plus growth. Before doing it consult someone that knows the details not just random people on GTAM. Governments have a history of freaking out about some of these maneuvers and someone that deals with them often can help you comply with todays interpretation (eg. is it worth keeping the smith money in a separate account, can it go into a registered account, etc).
Click to expand...
Most lender's HELOC will allow you to fix a term portion at at the regular mortgage rate and leave the revolving portion at a premium.

HELOCs aren't for everyone -- a lot of borrowers end up paying nothing off their mortgages after 5 years -- even worse many see their long term debt increase as they blow thru HELOC reserves.

Lenders will usually offer you up to 60% of your property value in a HELOC, think and plan carefully if you go with one.
 
GreyGhost said:
The kind of person that thinks a 5 bathroom townhouse is a good idea. Cant fix dumb.
Click to expand...

We took a look at a monster mansion a while ago. 5000 sq ft, 5 bedrooms, 8 bathrooms...

It was a bit puzzling. We asked the realtor, "Who would buy a place with 8 full 4-piece bathrooms?"

Answer: SE Asian extended families: three generations, uncles, aunts, grandparents and all their kids under one roof, sleeping 2-3 to a bedroom. 6 cars in the driveway and parked out on the street in front of the house.

The builders are catering to a certain demographic.
 
Mad Mike said:
Most lender's HELOC will allow you to fix a term portion at at the regular mortgage rate and leave the revolving portion at a premium.

HELOCs aren't for everyone -- a lot of borrowers end up paying nothing off their mortgages after 5 years -- even worse many see their long term debt increase as they blow thru HELOC reserves.

Lenders will usually offer you up to 60% of your property value in a HELOC, think and plan carefully if you go with one.
Click to expand...
I open them but rarely use them. When you dont need credit, they cant offer you enough of it. When you need it, good luck getting it at a reasonable rate.
 
Lightcycle said:
We took a look at a monster mansion a while ago. 5000 sq ft, 5 bedrooms, 8 bathrooms...

It was a bit puzzling. We asked the realtor, "Who would buy a place with 8 full 4-piece bathrooms?"

Answer: SE Asian extended families: three generations, uncles, aunts, grandparents and all their kids under one roof, sleeping 2-3 to a bedroom. 6 cars in the driveway and parked on the street in front of the house.

The builders are catering to a certain demographic.
Click to expand...
You should see brampton these days
They know a sucker when they see one.
 
You must log in or register to reply here.

Back
Top Bottom