Buying a house

[kaput]

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[Z_Fan]

If you are thinking about buying a place, and subsequently being unemployed, and then move shortly after - I think you'd be making a bad decision to buy for such a short term.

Especially if you don't have in excess of 25% of the new homes cost as your downpayment. Elsewise, you can expect a healthly CMHC fee to insure your mortage. That cost alone will likely pay the equivalent of several months (3-5) of rent...and it's just simply GONE right off the top.

I'd rent. If you happen to have %25 of the house cost and can avoid CMHC all together, then it might be worth considering a little more.

[danno]

i would stay home till your done school. save yourself tons of cash. do you have a downpayment already???? either way you would put yourself in a tight spot when your in school and paying for a house, just relax and finish school at home then search for a house. i bought my house last year and went to school for 2 months and i had trouble paying my bills.

tough call but if you have 8 months i don't think i would do it

[bol]

unless you have a solid employment history and excelllent credit you're probably not going to be able to get a mortgage any ways. they're much more picky than you'd expect. just because you can afford $1000/month in rent doesn't mean that the bank thinks you can afford a $1000/month mortgage

it's a wacky system once you really dig into it

[Weapon_R]

There are so many ways to get a mortgage, despite credit history and no downpayment finding a mortgage isn't going to be hard. Despite what you may also hear, its really no more expensive when compared to those who have good credit. If you realy dig into it, you can make tons of money selling assumable mortgages and incorporating the downpayment into the purchase price of the home to avoid making that initial large payment. The realtors on this site will know what i'm talking about, but I won't go into details here, as it is somewhat unethical to go that route.

Oh, and if you can afford a $900-1000 payment each month, GO FOR IT! The more time you have to build equity, the better. You *MUST* be able to make those payments on your own or have some type of emergency fund of 5,000 however, as tenants are unpredictable and unreliable and you may have to go it alone for a month or two every year.

Also, don't underestimate the advantages of low-priced condominiums around calgary. For 70k, Point of View was selling a very good sized condo, and your monthly payments would have amounted to approximately 600/month + condo fees = ~800/month. At that rate, its almost dumb to rent, as you could build so much equity in the next few years, sell the condo at a profit, and use what you put in on a large home once you have more stability.

[ninspeed]

CMHC fees will kill you... so save up the 25%.. then add 5% for emergencys... whats wrong with living at home? if its bad, find a cheep place to rent, and dump what ever you can in to an rsp. When your ready, you can pull the coin out of the rsp with out having to pay taxes on it under the first time home buyers thing. Then you got 15 years to pay it back.

[kaput]

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[Weapon_R]

You would both own the home, and would both be responsible for making the mortgage payments. If either of you defaults, you both go down. There is a way to draft an agreement, but none that cover both your asses as you think. Basically you would both own the home but both be responsible for the payments and such.

When you sell a place, the money from the sale goes to the payment of the mortgage, and anything over and above comes back to you. For example, if your house is worth 200k, and you've paid 20k on it and owe 180, when you sell and the new buyers get their mortgage, the 180k you get from them goes to the repayment of your mortgage, the other 20 to you and your realtors fees etc.

[danno]

i don't know how much money you have but you should try point of view, as posted above. they are cheap and start below 100k. what you could do is put your 5% down and then save the other 10% you said you could get and have that for your 8 months off?? buying a house takes time, just keep a eye out.

[JordanLotoski]

25% down for a first time home buyer is tough, when u consider the average house in calgary has hit 300k..thats 75k down payment. Id say save least 10% thats a decent downpayment and ill give u some flexibility with a mortage.

there are ways to get a 100% financed mortage ut the intrest rate is gonna kill you, like a 6.75 on a 5 year fixxed...your better off to wait and save that little bit of cash.

best of luck.

[hampstor]

if you say 400 a month is possible but double that is tight, I would advice you not to buy a home at this time.

Do not forget ontop of the mortgage there is:

property tax
home insurance (though this is going to be like $30 a month for you)
gas
utilities
cable/phone/internet
FOOD

[FiveFreshFish]

Originally posted by kaput
Something else I've considered is going into it with a trusted friend 50/50 with both our intents being to sell in 2 years. How would this work? Is there any way to draft up an agreement to cover both our asses in case something doesn't work out?

Make sure your agreement is on paper detailing every possible scenario like what happens if he dies, someone defaults on payment, you get married, end of friendship, buyout terms, someone takes a job outside of the city, etc. Priorities could change within those two years.

[Kimchee]

i just purcahsed a home and generally, it is tough for a first time home buyer to be relieved from CMHC fee's as 25% is alot of money right out of school. I did some mortgage shopping and it looked like CIBC and their "Better then Prime" mortgage deal was the best. Im putting down close to 20% and that was scraping every little penny from my savings/RRSP/Stocks savings/parents etc...

the banks are really picky with your annual income, net worth (assets/stocks/RRSP etc) and credit. If i were in your situation, being a full time student, you could possibly get a mortgage through a broker, but i wouldnt suggest it as your still young and you would have no cashflow after to have a life....haha....

also remember you'll have other legal fee's, insurance, property taxes, utilities, food, maintenance costs...

[rogue]

unless you get a 600sq ft apartment with a decent downpayment you will not have $850 mth mortgage but i am not sure how much you have to put down? Also dont forget there is a penelty to sell the house before your mortgage term is up but if you manage to get a new house in a new developement you can make a healty chunk of change reselling. I had a new house in Saddleridge 2years ago made $30000 in 2 years just research your investment make sure the community is going places and not some ghetto project. Also recommend assuming a mortgage as by the sounds of it the best way for you or look for a decent deal on a innercity fixer upper and do some work yourself lots of profit for studio homes and what not nowadays.

[kaput]

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[2000_SI]

Originally posted by kaput
Say I found a place, $120,000 and put $20,000 down (~15%), what kind of monthly payment would I be looking at?

I know someone that just bought a place in red deer, now maybe that changes things a bit, but her house was a 3 bedroom, she bought it for 140,000, and she put 8,000 down, and her monthly payments are $700, which is not including the money she gets for renting out the other rooms.

[69cougar]

Go to any bank website and they all have mortgage calculators...

try www.tdcanadatrust.com or .ca??

[kaput]

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[yohan4ws]

CMHC isn't as bad as most people make it out to be. It's a great tool to get people into a home when you can't afford 25% down.

CMHC is a 3.5% tacked onto the outstanding value of the house.

My mortgage for example,
$125,000 subtract 5% ($6250) = $118,250. * 3.5% cmhc: $122,388.75

$3800 dollars over 25 years... factor in that my house is already worth $142,000 I have 14% equity in my home ... so by the time I have 25% into my place, I won't have even paid the full CMHC value.

The hardest thing, as a student, is to get approved. if you have good credit and a decent income, walk into any banka nd see what you can get pre-approved for. Then goto a mortgage broker (I know a couple of really good ones, pm me for the #'s if you like) and they'll get you a better rate.

[yohan4ws]

CMHC isn't as bad as most people make it out to be. It's a great tool to get people into a home when you can't afford 25% down.

CMHC is a 3.5% tacked onto the outstanding value of the house.

My mortgage for example,
$125,000 subtract 5% ($6250) = $118,250. * 3.5% cmhc: $122,388.75

$3800 dollars over 25 years... factor in that my house is already worth $142,000 I have 14% equity in my home ... so by the time I have 25% into my place, I won't have even paid the full CMHC value.

The hardest thing, as a student, is to get approved. if you have good credit and a decent income, walk into any banka nd see what you can get pre-approved for. Then goto a mortgage broker (I know a couple of really good ones, pm me for the #'s if you like) and they'll get you a better rate.

[kaput]

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[TrevorK]

Originally posted by kaput
I'm able to rent a place with a roommate for $400/month including utilities. Everyone tells me to buy because its the same price as renting, but I expect to pay at least $850 for the mortgage and another $425 on top of that for utilities etc. bringing it to $1250 - $4-500 from a roommate so around $825. Have I got this right, or is there another way that I can make the cost of buying more comparable to renting? I'm getting confused with the whole thing. Please help!

You are not comparing equal properties - the place you rent for 800/month is not equivalent to the house/apartment you'd receive for 800/month in mortgage fees.

~$779/month is a 140K 25 year mortgage @ 4.5%.

A place that rents for 800/month with all utilities included most likely would go for 100-115K on the open market (Unless you're getting an amazing deal on rent).

[Weapon_R]

Originally posted by kaput
I just thought of another question - is the income generated by having a roomate to help pay the bills taxable? I would presume it is, in which case the benefits are eroded away quite substantially.

I wouldnt imagine so, because it would be your primary address.

[kaput]

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[TrevorK]

Originally posted by kaput
I just thought of another question - is the income generated by having a roomate to help pay the bills taxable? I would presume it is, in which case the benefits are eroded away quite substantially.

Yes - it is income.

However the deductions (Mortgage interest, utilities, etc...) can offset it completely.

In some cases, I've seen the deductions outweigh the income brought in.

[TrevorK]

Originally posted by kaput
I've been using 10 years as my period for the mortgage instead of 25 because I don't really want to be paying off a small place for the rest of my life. Like I said, I may very well move out of the city in 2 years to work in the field for a couple years. Would increasing it to 25 years do me any good (as in decrease the payments substantially)? Or would the first few years of payments all be interest and get lost like rent if I do sell?

Well, there's another reason why you're having a hard time stomaching the costs. A 10 year mortgage is unrealistic for most people (It's a really good idea though).

Here's a really nice mortgage calculator for you:
http://www.jeacle.ie/mortgage/

It'll help answer most of your questions.

[kaput]

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[sputnik]

25% down for a first house is pretty ridiculous for most people.

Go with a CMHC mortgage. In the amount of time it would take to save a 25% downpayment the house will have appreciated well over the original price plus CMHC fees. Waiting to buy isnt worth it in this city.

However, you still have to qualify before you can even consider buying anyways.

[max_boost]

If you are living in and renting out your primary residence to a roommate, I have no clue why you would report the rent money as income. Just take it and pay your bills!!!

Buy small and move up later. I'm living in a 1000sq.ft two storey home right now and it's just perfect. Gives me the flexibility to live my life without compromises. I still save money and when the time comes, I'll move up. Most important of all, easy to keep clean!!!!

Basically comes down to cash flow, purchasing a home seriously ties up your money. If money is tight, renting is most likely more feasible.

Good luck.

[TrevorK]

Originally posted by max_boost
If you are living in and renting out your primary residence to a roommate, I have no clue why you would report the rent money as income. Just take it and pay your bills!!!

Because depending on what you charge for rent you may actually have more in deductions that you do in rental income, which gives you a writeoff.

[91_Integz]

Originally posted by TrevorK


Because depending on what you charge for rent you may actually have more in deductions that you do in rental income, which gives you a writeoff.

It's pretty unlikely he'll be able to deduct $667 per month to offset the rental income though

[TrevorK]

Originally posted by 91_Integz


It's pretty unlikely he'll be able to deduct $667 per month to offset the rental income though

No it is not considering that he will have 50+ percent of his house rented out, which means that 50+ percent of his expenses are covered.

When you are going to have renters and plan on claiming their income you can take certain steps to increase your tax efficiency.

[91_Integz]

His expenses that would be eligible for writeoff wouldn't add up to his total mortgage payment for the month though

[TrevorK]

Originally posted by 91_Integz
His expenses that would be eligible for writeoff wouldn't add up to his total mortgage payment for the month though

Why not?

150K Interest only Mortgage Amount @ 4.25% (And yes - this is the best option for this type of scenario)
531.25/month Interest
120/month land tax
70/month cable + internet
40/month phone
120/month gas
120/month power + water

Gives us 670.84 in tax writeoffs (And that's not a complete list of eligible expenses even) assuming that his dwelling is 67% occupied by tenants (2/3 of it).

So yes - you can still claim the rent, and even come out ahead (As if you have more deductions than income, you will actually get taxes back) in terms of tax writeoffs as long as you are planning properly

I'm not saying it's easy - but with proper planning it is possible and many people do it.

Then again - there's always those who don't claim the rent as income, which isn't legal but saves the hassle come tax time.

[googe]

you cant get an "interest only" mortgage in his position

[TrevorK]

Originally posted by googe
you cant get an "interest only" mortgage in his position

I was able to get one if I wanted with 0 down, so I'm sure he can (Since he states he qualifies for the amount).

[91_Integz]

Correct me if I'm wrong, but Im almost positive you can't deduct mortgage interest

[TrevorK]

Originally posted by 91_Integz
Correct me if I'm wrong, but Im almost positive you can't deduct mortgage interest

Interest yes.
Principle no.

You can deduct only up to the percentage of your house that is rented out.

Line 8710 - Interest

You can deduct interest on money you borrow to buy or improve your rental property. You can also deduct interest you paid to tenants on rental deposits. If you are claiming interest as a rental expense on Form T776, do not include it as a carrying charge on Schedule 4, Statement of Investment Income.

Lump-sum amounts paid for interest, such as fees to reduce the interest rate on a mortgage, are not fully deductible in the year, but are prorated over the remaining original term of the mortgage or loan. A penalty or bonus paid to a financial institution to pay off your mortgage loan before it is due is treated in the same way. For example, if the term of your mortgage is five years, and in the third year you pay a fee to reduce your interest rate, treat this fee as a prepaid expense and deduct it over the remaining term of the mortgage.

You can deduct certain fees you have when you get a mortgage or loan to buy or improve your rental property. These fees include:

* mortgage applications, appraisals, processing, and insurance fees
* mortgage guarantee fees
* mortgage brokerage and finder's fees
* legal fees related to mortgage financing


EDIT: As a side note - this applies to primary residence when part is used for rental income.

[91_Integz]

hmm...maybe I wasn't clear in my original post. Sorry for the confusion.

Yes, you can deduct mortgage interest for rental properties...and only the proportion of the primary residence that actually being used for rental purposes ONLY.

That being said, since this guy and his buddy are moving in together, they both get the benefit of using the ENTIRE house so I don't think he could just write off 50% of the bills because he's paying for have the mortgage. It's not like his friend is just renting out the basement or something, he's living in the entire house with the "landlord"

This seems like something the audit dept would love to get their hands on...haha

[kaput]

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[TrevorK]

Originally posted by 91_Integz
hmm...maybe I wasn't clear in my original post. Sorry for the confusion.

Yes, you can deduct mortgage interest for rental properties...and only the proportion of the primary residence that actually being used for rental purposes ONLY.

That being said, since this guy and his buddy are moving in together, they both get the benefit of using the ENTIRE house so I don't think he could just write off 50% of the bills because he's paying for have the mortgage. It's not like his friend is just renting out the basement or something, he's living in the entire house with the "landlord"

This seems like something the audit dept would love to get their hands on...haha

Ther percentage of the house that you write off is totally up to you - however if/when you get audited you have to provide some sort of basis for your reasoning. If you can provide proof that your roommate uses 50% of your house, then yes you can write off 50% (Eg: rent out entire basement to him, at least on paper).

Could it happen in other situations? Absolutely. If I have a 2 bedroom condo, I could have the following rooms:
Master Bed/Bath
Guest Bed
Dining Room
Kitchen
Living Room
Bathroom

This would provide a 50% usage of the residence by the tenant, as all rooms other than bedrooms/bath are common use .

The only point here that could come under contention is the second bathroom - it could be considered one that is used by more than the tenant (eg: your house guests) so you may want to pro-rate is to 40-45%. However 50% is most likely justified and will be allowed.

You are right - this is prime target for an audit when you declare such a large percentage of your primary residence as rental property. However, if you have justification (and I do NOT advocate lying) it goes very smoothly. The auditor will ask questions of you that you answer, and 5 minutes later realize what he was getting at - the auditors are VERY intelligent at what they do and how they phrase their questions.


Please don't take this post as insulting - just trying to demonstrate what is possible in terms of taxation and creating legimate deductions.

[TrevorK]

Originally posted by kaput
Damn you guys sure know your stuff. I can't figure out what either of you are talking about. Where did you get that snippet about line 8710? It might be a good idea for me to read through that.

CCRA issues guides/reports to explain things - which is where that quote was pulled from.

Are you now planning on buying a place and renting out a portion? I was under the impression you are not, in which case I don't think any of this is needed by you (I've never heard of a case of people who are renting declaring the income of their tenants who aren't on the lease, so I have no research done on whether there are any sort of deductions applicable to you in that case and whether you need to declare the rent as income or if it's more of a cost-sharing agreement in the CCRA's eyes, which I assume it is...)....

[kaput]

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[googe]

Originally posted by TrevorK


I was able to get one if I wanted with 0 down, so I'm sure he can (Since he states he qualifies for the amount).

details please. it is my understanding that the only "interest only" mortgage is a 2nd mortgage or a HELOC, which requires far more equity than he has. but i have limited knowledge on the subject...id like to hear about what youre referring to.

[91_Integz]

Originally posted by TrevorK


Ther percentage of the house that you write off is totally up to you - however if/when you get audited you have to provide some sort of basis for your reasoning. If you can provide proof that your roommate uses 50% of your house, then yes you can write off 50% (Eg: rent out entire basement to him, at least on paper).

Could it happen in other situations? Absolutely. If I have a 2 bedroom condo, I could have the following rooms:
Master Bed/Bath
Guest Bed
Dining Room
Kitchen
Living Room
Bathroom



I agree....it would work something like this for the people who aren't following this conversation:

Rick rents out 3 rooms of his 12-room house. He is not sure how to split the expenses when he reports his rental income. Rick's expenses were property taxes, electricity, fire insurance, and the cost of advertising for tenants in the local newspaper.

Rick can claim the part of his expenses that relates to the part of the property he rented in the current taxation year. Since Rick rented 25% of his residence (3 out of 12 rooms), he can deduct 25% of his property taxes, electricity, and fire insurance costs from his rental income. He can deduct the full amount of the advertising expense, since this expense relates only to the rented part.


I don't find the post insulting at all no worries....

One negative thing about the rental though is that if he decides to sell the house any capital gain on the rented portion of the house will be taxable so it would be best to have the renter move out first, claim the house as your principle private residence and then sell the house

[TrevorK]

Originally posted by googe


details please. it is my understanding that the only "interest only" mortgage is a 2nd mortgage or a HELOC, which requires far more equity than he has. but i have limited knowledge on the subject...id like to hear about what youre referring to.

I obtained a secure line of credit for my mortgage - and was given the option of 0 down (But I'd have to pay CMHC fees). The key is that it's secured against the home (Not any sort of equity in it - the asset itself). Typically at prime (Although I guess if you have 0% down you may pay a bit of a premium), which makes it perfect for investing.

One advantage is that as your home goes up in value, you can then get your home re-appraised, increase the value of your line of credit, which can then be used for investing.

You can also acheive this when purchasing a home for less than appraised value - write into the contact "Purchased for $200,000 with a $20,000 gift in equity". Essentially, you are paying 180K for a 200K house, and you can then get your mortgage for 200K. This is what the old scam was to get around the minimum 5% downpayment rule...

Some institutions force a minimum payment that works out to be more than just interest when you owe a large amount, however with the institution I am with I only have to pay interest (Or $50 - whatever is higher).


Now - I am not with a bank persay - I am with Firstline (Division of CIBC), but I was offerred this secure line of credit through CIBC @ prime as well (Although I have a good relationship with my banker - so I am unsure if everyone gets this).

[googe]

Originally posted by TrevorK


I obtained a secure line of credit for my mortgage - and was given the option of 0 down (But I'd have to pay CMHC fees). The key is that it's secured against the home (Not any sort of equity in it - the asset itself). Typically at prime (Although I guess if you have 0% down you may pay a bit of a premium), which makes it perfect for investing.

One advantage is that as your home goes up in value, you can then get your home re-appraised, increase the value of your line of credit, which can then be used for investing.

You can also acheive this when purchasing a home for less than appraised value - write into the contact "Purchased for $200,000 with a $20,000 gift in equity". Essentially, you are paying 180K for a 200K house, and you can then get your mortgage for 200K. This is what the old scam was to get around the minimum 5% downpayment rule...

Some institutions force a minimum payment that works out to be more than just interest when you owe a large amount, however with the institution I am with I only have to pay interest (Or $50 - whatever is higher).


Now - I am not with a bank persay - I am with Firstline (Division of CIBC), but I was offerred this secure line of credit through CIBC @ prime as well (Although I have a good relationship with my banker - so I am unsure if everyone gets this).

thats a HELOC, which sounds totally different than what you were just saying. you cant secure it against a house you dont have equity in, because that is zero sum. its not secured if youre borrowing a house you own 0% of, right? banks will take 75% of your equity as security and offer you a line of credit for that amount.

the only way to use this for an interest only mortgage is to have enough equity in 1 property that your secured line of credit is big enough to cover the mortgage of a second property. if this is what you meant by interest only mortgage, this is obviously not possible. if you are talking about another means to obtain an interest only mortgage, id like to hear about it...

[TrevorK]

Originally posted by 91_Integz


I agree....it would work something like this for the people who aren't following this conversation:

Rick rents out 3 rooms of his 12-room house. He is not sure how to split the expenses when he reports his rental income. Rick's expenses were property taxes, electricity, fire insurance, and the cost of advertising for tenants in the local newspaper.

Rick can claim the part of his expenses that relates to the part of the property he rented in the current taxation year. Since Rick rented 25% of his residence (3 out of 12 rooms), he can deduct 25% of his property taxes, electricity, and fire insurance costs from his rental income. He can deduct the full amount of the advertising expense, since this expense relates only to the rented part.


I don't find the post insulting at all no worries....

One negative thing about the rental though is that if he decides to sell the house any capital gain on the rented portion of the house will be taxable so it would be best to have the renter move out first, claim the house as your principle private residence and then sell the house

If you rent part of the building where you live, you can claim the amount of your expenses that relate to the rented part of the building. You have to divide the expenses that relate to the whole property between your personal part and the rented part. You can split the expenses using square metres or the number of rooms you are renting in the building, as long as the split is reasonable.

For example, if you rent 4 rooms of your 10-room house, you can deduct:

100% of the expenses that relate only to the rented rooms, such as repairs and maintenance of the rooms; plus
40% (4 out of 10 rooms) of the expenses that relate to the whole building, such as taxes and insurance.
If you rent rooms in your home to a lodger or roommate, you can claim expenses for the part you are renting. You can also claim an amount for the rooms in your home that you are not renting that both you and your lodger or roommate use. Factors such as availability for use, or the number of persons sharing the room, can be used to calculate the allowable expenses. You can also calculate these amounts by estimating the percentage of time the lodger or roommate spends in these rooms (for example, the kitchen and living room).

Your example applies directly to those who rents out rooms - like in a rooming house. However, as a homeowner renting out a room within a house if the renter is granted access to the entire house (And spell it out in the lease) then you can deduct portions for shared rooms.

Changing part of your principal residence to a rental property
You are usually considered to have changed the use of part of your principal residence when you start to use that part for rental purposes. However, you are not considered to have changed its use if:

the part you use for rental purposes is small in relation to the whole property;
you do not make any structural changes to the property to make it more suitable for rental purposes; and
you do not deduct any CCA on the part you are using for rental purposes.

As well, you do not have to pay capital gains when renting out your primary residence.

The interpretation of "small" is of course wide open - and I have seen a situation with 2 roommates/1 owner deducting the majority of their expenses and stand up to an audit because the purpose of the residence isn't a rental property, and the auditor agreed with their definition.

You can always call the CCRA for their opinion as well - it is not binding, but gives you another point of view.

[TrevorK]

Originally posted by googe


thats a HELOC, which sounds totally different than what you were just saying. you cant secure it against a house you dont have equity in, because that is zero sum. its not secured if youre borrowing a house you own 0% of, right? banks will take 75% of your equity as security and offer you a line of credit for that amount.

the only way to use this for an interest only mortgage is to have enough equity in 1 property that your secured line of credit is big enough to cover the mortgage of a second property. if this is what you meant by interest only mortgage, this is obviously not possible. if you are talking about another means to obtain an interest only mortgage, id like to hear about it...

When I bought my house, I was given the option of purchasing it with 0% down on a secure line of credit.

That would have meant that I would have been given a $200,000 line of credit, which I would then use to purchase my house. If I were to default on my monthly payment, they would have the option to seize the house.

As I said - it's not a traditional mortgage - and use mainly by investors. I went through a non-major bank to get it, but I was offerred the same product at CIBC through my financial advisor there.


On my mortgage approval document, I have listed "Product: LOC"

Further it states in the conditions:
"Regular payments of interest only on the first Line of Credit mortgage are to be made monthly. The minimum payment is fifty ($50). If the balance on your Line of Credit is less than $50 then the entire Line of Credit balance is payable on the next Line of Credit payment date."

My mortgage broker even gave me a checklist labelled "Secured line of credit checklist".....


What else would you like to see to show you how I have a mortgage on a secured line of credit?

[91_Integz]

Interesting. Lots of good info in this thread

[91_Integz]

Originally posted by googe


you cant secure it against a house you dont have equity in, because that is zero sum. its not secured if youre borrowing a house you own 0% of, right? banks will take 75% of your equity as security and offer you a line of credit for that amount.


This is exactly right...I just checked with a lender that works at the same bank as me

[TrevorK]

Originally posted by 91_Integz


This is exactly right...I just checked with a lender that works at the same bank as me

Unfortunately you are wrong.

I HAVE a secured line of credit which I use to pay for my house:

My Mortgage - More Details

Line of Credit Details:

Interest Rate 4.250%
Outstanding Balance $88,324.05
Available Balance $61,675.95
Payment Due Date July 9, 2005
Outstanding Payment $312.14

[TrevorK]

Note: That is a copy/paste from my online banking. Obviously I can post screenshots if needed, however I figure the text itself would do just fine.


If your example of how my mortgage works was true in my case it would seem that I have $200,000 of equity in my home(Or other assets) at age 23 to get a $150,000 secured line of credit.

I wish - in a couple years yes, but not now....

[91_Integz]

oh no no.....that's not what I meant. 75% of the value value of your house you can get for an HELOC - they RECOMMEND you have 25% equity in your house or it's not even really worth it.

Does that sound right now?

[TrevorK]

Originally posted by 91_Integz
oh no no.....that's not what I meant. 75% of the value value of your house you can get for an HELOC - they RECOMMEND you have 25% equity in your house or it's not even really worth it.

Does that sound right now?

I was offered 0% down (So no equity) when I got my line of credit for my house.

I opted instead to put 25% down.

[91_Integz]

Was that a special case though? Maybe it's different from bank to bank? I'm not sure

[TrevorK]

Originally posted by 91_Integz
Was that a special case though? Maybe it's different from bank to bank? I'm not sure

When I asked for it I wasn't looked at funny - the broker knew exactly what I was looking for...

As I said earlier - my line of credit is through firstline however, which is not a traditional bank that most deal with...

[91_Integz]

Cool. Thanks for all the info

[s2k_boi]

CMHC fees aren't that bad, its only 2.75% based on 5% down payment.

2% cmhc if you can swing 10% for the down.


And you can get HELOC (home equity line) for more the 75% loan to value, which would be considered as high ratio and you have to go thru cmhc.

i wouldn't recommend a high ratio one, since you choose between 10 or 15 years for min. interest only payments and you pay the a chmc premium based on that and loan value (percentage wise).

Finally, those high ratio home equity line is meant for really professionals starting up and income is suppose to rise (ie. doctors, dentists, etc). and you can't use this to refinance debt as cmhc will NOT approve it.

hopefully that helps :thumbsup: