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  1. #101
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    So for anyone wondering about the details of how a lender sets these up...

    I will use manulife one as an example, cause they were just giving us a presentation a couple weeks ago and it’s fresh in my head still.

    So step one is appraisal, using round numbers let’s call it $500k

    So for an uninsurable loan (which is the only non recourse loan you can get, cause cmhc/genworth, etc will come after you for the difference, cause don’t get it confused. The insurance you paid for isn’t for you. It’s for the lender) maximum LTV is 80%, maximum non conforming loans are 65%

    So $100k down
    $400k collateral charge registered on title
    $75k in a non readvancing term mortgage (fully conforming loan, meaning max am of 30yrs too)
    $325k in a readvancing term mortgage

    As the two different mortgages inside the product are paid down the principal from the equity paid on the $325k mortgage converts to space on a HELOC, since this is the non conforming part of the loan at any point you can take that heloc balance and also lock it into a new term with whatever duration and am you want.

    So your liquidity issue is solved, fluctuations in house value are only a concern if something serious happens and at renewal and the lender requests an appraisal to renew (FYI: even with the haircut to the condo market, we have yet to have anyone have a client call in this situation) the $400k charge remains on title till you no longer have your business with that lender as you essentially will have access to that money (minus the 15% loan, which will hopefully be the last priority you have to pay off) till you make a change. If the market increases in value you can also request an increase to that numbers

    But since this is all one charge on the title, it’s all one loan. So for osfi compliance the whole $400k amount is used with a 25yr am at the heloc rate plus 2% for qualifying. So that to me makes me think that it’s nonrecourse in it’s entirety, cause the whole thing is basically just a mortgage, and within that mortgage the lender is the one that’s dictating the terms of repayment.

    So set readvancing loan to a short am, non readvancing to max am, crush loan. If you could potentially be underwater, withdraw full heloc, mail in the keys, 80s style

    Another note worthy feature though... this loan pays itself out of the heloc portion every month, so in a period of no income, your bills will pay themselves, and bruised credit will only start when the heloc runs out of room and you are not making the minimum payments to keep it off the limit

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    Quote Originally Posted by A790 View Post
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    The idea of paying interest to access my money is not appealing to me at all.

    But if you didn’t pay it down to begin with... was it even really your money?
    Last edited by ercchry; 05-08-2019 at 11:28 AM.

  2. #102
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    Quote Originally Posted by ercchry View Post
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    But if you didn’t pay it down to begin with... was it even really your money?
    Every payment I make builds "equity", right?

    It's like a forced savings account. One I can't easily access.

  3. #103
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    Quote Originally Posted by A790 View Post
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    The idea of paying interest to access my money is not appealing to me at all.
    I mean you are free to not own a house. Not like you can expect liquidity from any other of your possession.
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
    fact.

  4. #104
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    Quote Originally Posted by A790 View Post
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    Every payment I make builds "equity", right?

    It's like a forced savings account. One I can't easily access.
    It can be... but also if it is your piggybank then one day you might have to access it. It costs you about 3% to access money that wasn’t yours and depending on how you want to access it, the cost can be the same, or up to say 1.45% higher.

    So you save the 3% paying above and beyond the original terms of the loan by making those additional payments... so if you never did that you’d pay 3% on more of the money you borrowed, hitting the undo button on those decisions are only costing you what you saved cause you are just reborrowimg the original money again, and potentially at the same cost... hell. It could be even cheaper depending what the original loan was and the market you want it back in, but you still saved as well as you just didn’t owe as much, till you hit hard times.

  5. #105
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    Quote Originally Posted by max_boost View Post
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    Oh man I hope Beyond is around in 20-30 years to see who hit that 2-3 mill target set it and forget Ronco!
    Why so low?

  6. #106
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    Quote Originally Posted by 89coupe View Post
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    Why so low?
    The divorcees are dragging down the average
    Quote Originally Posted by flipstah View Post
    You can't score on shots you don't take.

  7. #107
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    10 years ago ppl were saying 1mill ain’t a lot and 10 years later still don’t see no millionaires so gotta temper expectations lol abs for 2020!
    Quote Originally Posted by max_boost View Post
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    In Beyond We Trust

  8. #108
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    Quote Originally Posted by max_boost View Post
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    10 years ago ppl were saying 1mill ain’t a lot and 10 years later still don’t see no millionaires so gotta temper expectations lol abs for 2020!
    Snappppp! Called out by max_boost.

    Where y'all millionaires at!

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    Quote Originally Posted by A790 View Post
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    The idea of paying interest to access my money is not appealing to me at all.
    It's all the same money, just different buckets. There's also a cost to keeping "your money" accessible (ie savings/chequing account).

    Simplified example with made up interest rates:

    Scenario A:
    $500k house
    - $100k outstanding mortgage at 3% with HELOC available at 4%
    $0 in savings account
    Net worth = $400k

    Scenario B:
    $500k house
    - $150k outstanding mortgage at 3%
    $50k in savings account paying 1% interest
    Net worth = $400k

    Ignoring income tax, in Scenario B it costs you 2% (3% - 1%) to keep $50k in your savings account as opposed to paying down the mortgage even though it's "your money".

    But now you want to buy a boat for $50k. You have no savings in Scenario A, so you have to draw it entirely from the HELOC at 4%
    Scenario A:
    $100k mortgage at 3% + $50k HELOC at 4%
    $0 in savings account

    Scenario B:
    $150k mortgage at 3%
    $0 in savings account

    The difference between the 2 scenarios is 1% on $50k used to fund the boat purchase.

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    Quote Originally Posted by max_boost View Post
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    10 years ago ppl were saying 1mill ainít a lot and 10 years later still donít see no millionaires so gotta temper expectations lol abs for 2020!
    Are you basing this on the "Post your Net Worth" thread?
    Originally posted by max_boost
    Hey baller, any problem money can solve is no problem at all. Don't sweat it.

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    Quote Originally Posted by killramos View Post
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    I mean you are free to not own a house. Not like you can expect liquidity from any other of your possession.
    You aren't wrong.

    I did a rent vs. buy calculation a few weeks ago. Had I not ever bought a house and invested the difference between rent + home ownership costs, I'd be about $60k richer today.

    I'm also not a materials guy. I invest 50-60% of what I make. I wish I'd have done that instead.

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    Quote Originally Posted by Strider View Post
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    It's all the same money, just different buckets. There's also a cost to keeping "your money" accessible (ie savings/chequing account).

    Simplified example with made up interest rates:

    *SNIP*
    This was really helpful, thanks. I have a hard time with financial "explanations" but numbers click right away for me.
    Follow me on Instagram and Facebook!

  12. #112
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    Quote Originally Posted by A790 View Post
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    You aren't wrong.

    I did a rent vs. buy calculation a few weeks ago. Had I not ever bought a house and invested the difference between rent + home ownership costs, I'd be about $60k richer today.

    I'm also not a materials guy. I invest 50-60% of what I make. I wish I'd have done that instead.
    Hrm... odd, cause the same home you own I use to rent out and it cash flowed when it only had 5% down. Would like to see how you calculated that

  13. #113
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    Quote Originally Posted by ercchry View Post
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    Hrm... odd, cause the same home you own I use to rent out and it cash flowed when it only had 5% down. Would like to see how you calculated that
    Likely a lot to do with these assumptions

    Quote Originally Posted by A790 View Post
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    The value of my home has dropped 11% since I bought it four years ago. At the same time, the S&P500 has returned an average of 10.5%/yr. So I could have seen 40%+ capital appreciation.
    Originally posted by max_boost
    Hey baller, any problem money can solve is no problem at all. Don't sweat it.

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    Thank Trump for those gains.
    Quote Originally Posted by max_boost View Post
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    In Beyond We Trust

  15. #115
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    Quote Originally Posted by Strider View Post
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    Likely a lot to do with these assumptions
    Yeah I think the math might be skewed a touch. Using what I had purchased for, over a 5yr period rent has increased marginally for those units (about $100/month) but even at the worst case 5% down 25yr am that you could have done at the time principal plus cash flow difference would have went from about $350/month to $700/month today meaning you would have covered your “investment” of under $20k a couple times over by now, while having more disposable income to add to investments as well the entire time

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    Quote Originally Posted by ercchry View Post
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    Yeah I think the math might be skewed a touch. Using what I had purchased for, over a 5yr period rent has increased marginally for those units (about $100/month) but even at the worst case 5% down 25yr am that you could have done at the time principal plus cash flow difference would have went from about $350/month to $700/month today meaning you would have covered your “investment” of under $20k a couple times over by now, while having more disposable income to add to investments as well the entire time
    You paid much less than I did.

    Rents in my area are $1,500ish/mo right now. That creates a $900 deficit between my mortgage + tax + insurance payment, and that's assuming nothing in the house breaks.

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    Quote Originally Posted by Strider View Post
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    It's all the same money, just different buckets. There's also a cost to keeping "your money" accessible (ie savings/chequing account).

    Simplified example with made up interest rates:

    Scenario A:
    $500k house
    - $100k outstanding mortgage at 3% with HELOC available at 4%
    $0 in savings account
    Net worth = $400k

    Scenario B:
    $500k house
    - $150k outstanding mortgage at 3%
    $50k in savings account paying 1% interest
    Net worth = $400k

    Ignoring income tax, in Scenario B it costs you 2% (3% - 1%) to keep $50k in your savings account as opposed to paying down the mortgage even though it's "your money".
    The only issue with this is the discussion at hand. I thought the discussion was to pay off mortgage early, or invest the extra instead. Scenario B is 50k in investments returning 10%(average market return). So your investment/savings is making you 6% when you factor what you're paying on the borrowed money for the mortgage you're not paying off.

    If mortgage rates ever go full retard again, I'm sure there will be a lot of hindsight 20/20 of people wishing they paid down the mortgage. But based on the economy it doesn't appear anything like would happen in the near future.

  18. #118
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    Quote Originally Posted by A790 View Post
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    You paid much less than I did.

    Rents in my area are $1,500ish/mo right now. That creates a $900 deficit between my mortgage + tax + insurance payment, and that's assuming nothing in the house breaks.
    I didn’t pay much less, I also think you’re a little low on rents as there is one listed currently for $1750.

    You also can’t compare with your entire mortgage payment as that’s not fair cause a portion is going into your “forced savings account” you can also adjust that payment at anytime if you don’t feel like it’s beneficial to pay down the loan, push am back out, move to an interest only product, etc. Then you’d Be closer to an apples to apples comparison

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    Quote Originally Posted by ercchry View Post
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    I didn’t pay much less, I also think you’re a little low on rents as there is one listed currently for $1750.

    You also can’t compare with your entire mortgage payment as that’s not fair cause a portion is going into your “forced savings account” you can also adjust that payment at anytime if you don’t feel like it’s beneficial to pay down the loan, push am back out, move to an interest only product, etc. Then you’d Be closer to an apples to apples comparison
    Units on my street are rented for $1,500ish last time I checked. I hope rents go up though- we want to GTFO but aren't in a position to sell since I don't want to swallow $38,000.

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