Settle a debate

[max_boost]

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If I'm buying a $500g house in Calgary right now, it's in need of some serious updating. So I put the minimum amount down that I can, and use the rest for reno's.

Or can buy a very nice 500k condo

[jwslam]

Depends on the type of people you are:

If putting $100k down means your other $100k goes into your savings plan i.e., your G-Wagon, that's not a savings plan nor an investment.
That type of person should max out everything they can towards the loan as self discipline is poor.

[bjstare]

Why is option D even an option? Putting hundreds of thousands in a savings account is rarely the correct answer to any question haha.

[hrdkore]

if it's a rental, do the 150k and jack up the rent like most landlords.

[ercchry]

If the kids are out of the house and you only have $200k… put it all down. Your track record is poor

[ExtraSlow]

I assumed he meant an investment that he didn't want to specify.

One wrinkle, if you aren't beyond baller and haven't been filling your RRSP room, is that you could invest in RRSP with a significant portion, and use the tax return from that to plow back into prepayments on the mortgage. Some folks have hundreds of thousands of dollars of RRSP room. Might need to spread that over a few years to make it make sense then, and of course, that becomes something that requires ongoing management and work to follow up on, which people are usually bad at.

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If the kids are out of the house and you only have $200k… put it all down. Your track record is poor

Yes probably that.

[spike98]

This is math that needs to be considered when considering high ratio vs conventional mortgage. Rates will be different and there is CMHC fees to consider. The question is, if the rate discount you get offsets the fees and results in a lower cost of borrowing putting you in the money.

An option i would consider would be a blend of C and D, if the numbers make sense:

- Minimum mortgage for the better rate
- Investing balance of savings in a medium risk investment
- Maximizing lump sum/principal payments using the investment as the source

Id run the 3 scenarios in a spread sheet using some conservative assumptions and go with what ends up costing the less over all.

[SJW]

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If the kids are out of the house and you only have $200k… put it all down. Your track record is poor

Divorce happens. I was set back a ways due to this. Good thing I'm prepared to never retire.

[Xtrema]

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You want to buy a house. House cost 500k. You have 200k to put down. Do you....
A) put the whole 200k down for a lower mortgage payment.
B) put 20% down and save the rest to put bulk yearly payments
C) put as little as possible down, meaning larger mortgage payments, but max out yearly payment.
D) put as little as possible and put the rest into some sort of savings account.

What say you rich motherfuckers

A and choose lowest amortization period you can afford.

Your kids are out of the house which can potentially means you are at the tail end of active income years (unless you had them while you are in your teens).


And like Killy said, if you feel like you want extra $ to invest in something, HELOC and write off interest against your income.

[03ozwhip]

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Why is option D even an option? Putting hundreds of thousands in a savings account is rarely the correct answer to any question haha.

To be fair I actually meant to put investments with it, but never went back to do it when I saw it.

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A and choose lowest amortization period you can afford.

Your kids are out of the house which can potentially means you are at the tail end of active income years (unless you had them while you are in your teens).


And like Killy said, if you feel like you want extra $ to invest in something, HELOC and write off interest against your income.

This is interesting and since I'm not a finance bro, have no idea what you mean by writing off the interest against your income, never heard of this before.

[ercchry]

The smith maneuver

[tonytiger55]

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Depends on type of income, and consistency of said income.

Short and long term goals? Where are you in life? Kids?

Too difficult to say without more data points

Pretty much this. Insufficient data to make a informed decision.

But if I was to pick one. Then it would be A, but on a 30 year mortgage. But pay it off like a 25 year with extra payments.

[ThePenIsMightier]

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The smith maneuver

Also not a Circle Jerk nor a Dutch Rudder for @SKR 's benefit

[Xtrema]

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This is interesting and since I'm not a finance bro, have no idea what you mean by writing off the interest against your income, never heard of this before.

https://www.investopedia.com/terms/s/smith-maneuver.asp

The basic is, you are trying to make sure you convert debt with interest isn't tax deductible (mortgage) to one that is (HELOC).

[max_boost]

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https://www.investopedia.com/terms/s/smith-maneuver.asp

The basic is, you are trying to make sure you convert debt with interest isn't tax deductible (mortgage) to one that is (HELOC).

finally beyond understands the power of the heloc lol very nice stanley morgan xtrema

[Strider]

I wouldn't really consider Smith maneuver until TFSA and RRSP are full though, which isn't likely if there's only $200k for down payment when kids are moving out.

[Xtrema]

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finally beyond understands the power of the heloc lol very nice stanley morgan xtrema

Almost 30 years later, I am done with all the mortgages. Time to live large than paying the gov.

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I wouldn't really consider Smith maneuver until TFSA and RRSP are full though, which isn't likely if there's only $200k for down payment when kids are moving out.

Also this. Make sure your run out of legit shelters first.