Variable mortgage regret?

[pheoxs]

This quote is hidden because you are ignoring this member. Show Quote

I thought <3% rate has mostly expired back in May/June.

Some lenders do 120 day rate holds and there's one or two that do longer, up to 180 day holds. You get a worse rate, but a rate from March even plus 1% is still better than todays rates.

[Xtrema]

This quote is hidden because you are ignoring this member. Show Quote

How do you go about "just staying in your home". when your renewal increases your payment above what your income is?

New: $300K 2% 25yr amort = $1270/mth
Renew: $300K (assuming house price adjusted down 10%) 5% 20yr amort = $1971/mth


5% 25 yr amort = $1744.


And assuming you don't need CMHC, you can extend that to 30 years and drop the payment to $1414.

Still cheaper than renting the same class of houses/townhouses.

So there are ways to adjust your budget to stay in your home. Worst case you just downside and move. A roof over your head is pretty cheap in Calgary as 2bed 900sqft is under $300k. The key is to stay employed which isn't that hard for now.

[suntan]

This quote is hidden because you are ignoring this member. Show Quote

How do you go about "just staying in your home". when your renewal increases your payment above what your income is?

There are people that have to sell and those that want to live somewhere else. It's the latter that'll just hang around and wait another 5 years before trying again.

The percentage of homes that are in foreclosure is always very small. The bank will be very flexible in extracting more interest from you.

[kenny]

This quote is hidden because you are ignoring this member. Show Quote

How do you go about "just staying in your home". when your renewal increases your payment above what your income is?

The lender will four square you and let you keep home. Lower your payment, extend the term, and rake in even more $.

[suntan]

And raise your rate, because you're more of a risk.

That's why lenders are just salivating at this situation.

[riander5]

I always have regret when I think of ways I could have had more $$ in my pocket than I do now

[ExtraSlow]

I guess the secret is to pay off your mortgage! Let's get at it boys.

[killramos]

This quote is hidden because you are ignoring this member. Show Quote

I guess the secret is to be able to pay off your mortgage when you want! Let's get at it boys.

FTFY

Never be in a position where your mortgage could sink you. But instead use the leverage as a tool.

[ercchry]

This quote is hidden because you are ignoring this member. Show Quote

And raise your rate, because you're more of a risk.

That's why lenders are just salivating at this situation.

I think it’s more profitable to have clients getting shuffled from lender to lender and collecting more and more loans and also receiving large payout penalties than what’s happening now. Keep in mind that securitized loans are also more profitable than uninsured garbage that’s stuck on the books with poor repayment

[Buster]

This quote is hidden because you are ignoring this member. Show Quote

I guess the secret is to pay off your mortgage! Let's get at it boys.

you're still faced with the question of whether or not this is the best use of spare capital

[max_boost]

Is paying off your mortgage overrated

[Buster]

This quote is hidden because you are ignoring this member. Show Quote

Is paying off your mortgage overrated

It can be.

[Cagare]

This quote is hidden because you are ignoring this member. Show Quote

It can be.

Has there been a time in history where the mortgage lending rate has exceeded inflation? I think when I got my first mortgage nearly 20 years ago that it was. Do you just consider that, or do you consider the potential increase/decrease in the value of the underlying asset instead? Seems like that would be a lot more volatile.

[ExtraSlow]

I'm sure I wrote this elsewhere, but it's my opinion that for a "regular" individual, paying down your mortgage has a very attractive risk-adjusted return. Two main reasons. 1) there is no downside risk like there are in many other investments and 2) there is no tax on the savings, unlike potential taxable capital gains or other investment income.

Now sure, it's boring as hell and it may not be the single perfect highest return choice you can make, but most regular people don't choose that either. They do something suboptimal or excessively risky. Boring is good.

[max_boost]

We are not regular individuals

[90_Shelby]

This quote is hidden because you are ignoring this member. Show Quote

I'm sure I wrote this elsewhere, but it's my opinion that for a "regular" individual, paying down your mortgage has a very attractive risk-adjusted return. Two main reasons. 1) there is no downside risk like there are in many other investments and 2) there is no tax on the savings, unlike potential taxable capital gains or other investment income.

Now sure, it's boring as hell and it may not be the single perfect highest return choice you can make, but most regular people don't choose that either. They do something suboptimal or excessively risky. Boring is good.

This.

Step 1: Pay off house
Step 2: Buy Trackhawk
Step 3: Eliminate risk of driving a builder grade Ridgeline
Step 4: Buy a 911?

[max_boost]

Real ballers drive 911s
Porsche night was dope

[90_Shelby]

This quote is hidden because you are ignoring this member. Show Quote

Real ballers drive 911s
Porsche night was dope

Mine was not even noticeable in the sea of colourful GT cars.

Back on topic. I would still prefer a variable mortgage.

[riander5]

This quote is hidden because you are ignoring this member. Show Quote

I guess the secret is to pay off your mortgage! Let's get at it boys.

Decent book if you are battling with the idea of interest rates vs investments and like the K.I.S.S method

https://www.goodreads.com/en/book/sh...path-to-wealth

Suntan might even approve... might

[The Cosworth]

This quote is hidden because you are ignoring this member. Show Quote

On a $500K mortgage (not PP, but mortgage):

2.0% = $2,117.26/month

5.9% = $3,169.37/month

Variable discounted (via RateHub) 5-year rates since 2006:

I don't care who you are, a 50% increase in your mortgage is at least an adjustment. I am sure glad I am on fixed and could absorb that 1k if I had to. I can imagine many who can't.