Here Come 30 Year Mortgages

[MP Kid]

I had a buddy that bought a $30000 holiday trailer off the lot and they loaned him the money on a 20 yr term. We tried to explain to him he was buying the trailer for closer to $60000 if you figured out the interest. He didn’t care. He had to have a trailer to camp in.

This is exactly the problem…

He probably had $5G… and that’s what he should have been looking at… instead it’s always “bigger/better”…. And people end up overpaying and/or in trouble…

I have zero sympathy for these types of people… glad my folks taught me a bit about managing my own affairs.

Nothing wrong with saving up and buying… or at least putting a good chunk down and manageable repayment terms.

This mindset goes for every thing, houses, vehicles, toys….
Unless you’re borrowing on an item that will help you generate income, the rest is just junk….

 

[arff]

Was speaking with a neighbourhood realtor last nigh while out walking the dog. I asked him for his opinion on what he sees happening as he has been in the business for a long time. Short story is Clagary's market has traditionally been stronger than Edmonton's, but that has been changing quickly as investors pull out of Calgary for cheaper Edmonton. He is seeing investors pay 10's to 100's of thousands more for houses here just to secure them. Realtors are quite busy in Edmonton right now. Alot of these investors are from BC he said, where the investment market is too expensive. He figures BC is going to start seeing house prices drop.

Take it for what it's worth.

Yes,, Edmonton and surrounding area has been busy. Lots of homes are getting multiple offers within 1 day of being on the market. Also going over asking price.

 

[snopro]

This is exactly the problem…

He probably had $5G… and that’s what he should have been looking at… instead it’s always “bigger/better”…. And people end up overpaying and/or in trouble…

I have zero sympathy for these types of people… glad my folks taught me a bit about managing my own affairs.

Nothing wrong with saving up and buying… or at least putting a good chunk down and manageable repayment terms.

This mindset goes for every thing, houses, vehicles, toys….
Unless you’re borrowing on an item that will help you generate income, the rest is just junk….

Lots of guys looking over the fence trying to keep up with the Jones. Same with farm equipment. Most young families in our area have the nicest holiday trailers.

 

[SUMMIT TREE]

When we bought my wife her last vehicle it was used off a lot. Like 32K. The financial lady was absolutely baffled as to why we weren’t buying a brand new car. Well see lady, mainly because your new car is 64K and this one is only 32K. With very low kms its like new for half the price.

 

[ZRrrr]

When we bought my wife her last vehicle it was used off a lot. Like 32K. The financial lady was absolutely baffled as to why we weren’t buying a brand new car. Well see lady, mainly because your new car is 64K and this one is only 32K. With very low kms its like new for half the price.

They focus on payment only. Why buy used, when for the same payment each month we can get you in new. Finance lady probably had no idea people might do what you did, as likely she only sees people working off monthly payment dollar amounts. It's crazy!

 

[Rjjtcross8]

They focus on payment only. Why buy used, when for the same payment each month we can get you in new. Finance lady probably had no idea people might do what you did, as likely she only sees people working off monthly payment dollar amounts. It's crazy!

The way I look at dealers is that the product is actually the financing and the new car is only the tool or mechanism to sell the “financing”.

 

[ABMax24]

The way I look at dealers is that the product is actually the financing and the new car is only the tool or mechanism to sell the “financing”.

100% and you almost always get better pricing if you finance. So finance and then pay down the loan after signing the papers.

 

[snopro]

100% and you almost always get better pricing if you finance. So finance and then pay down the loan after signing the papers.

Bingo! That’s the way it works.

 

[acesup800]

This is exactly the problem…

He probably had $5G… and that’s what he should have been looking at… instead it’s always “bigger/better”…. And people end up overpaying and/or in trouble…

I have zero sympathy for these types of people… glad my folks taught me a bit about managing my own affairs.

Nothing wrong with saving up and buying… or at least putting a good chunk down and manageable repayment terms.

This mindset goes for every thing, houses, vehicles, toys….
Unless you’re borrowing on an item that will help you generate income, the rest is just junk….

Most real estate generates income, whether it be passive or active. I have owned 7 houses in my life so far and I only lost capital $$ on one of them. And if I would have held on to the damn thing a bit longer, it would have paid off as well. Agree one shouldn't be using a 30 year or even a 25 year mortgage, but a lower payment to start isn't a bad thing and then throw money on it later in life when you are able. You can't stop idiots from buying whatever, whenever, so I would personally like the govt to butt out and let capitalism work like its suppose to. If someone will lend the money under whatever terms, then you are good to go.

 

[bobsledder]

I heard you can do 20 or 30yr on boats as well.

Looked at a boat this summer and the MSRP was 399K! Guess that is why 20 to 30 year for finance. I see lot's of that model on the lake and guys running in them are late 30 early 40 year old's so they are living a good life.
Sales kid told me they often discount them by 100K or more and a lot of buyers pay cash. Lot of coin for a 3 month season.
One thing about these kind of boat though is they actually can appreciate believe it or not. I have always sold for more than I paid. Just sold an 18 year old Mastercraft for more than it's MSRP when new and it only took two days to sell it.

 

[bobsledder]

Some people are spenders and some are savers. I prefer the perfect mix of both so an early retirement is an option.

My wife was a Sunlife CFP and would have clients in their mid to late 50's with 15 years or more on a house mortgage, loans on a couple of vehicles ask what they need to put away to retire in five years. When given the monthly amount they need to save they fell out of their chairs. A lot of those people out there.

 

[LennyR]

Most real estate generates income, whether it be passive or active. I have owned 7 houses in my life so far and I only lost capital $$ on one of them. And if I would have held on to the damn thing a bit longer, it would have paid off as well. Agree one shouldn't be using a 30 year or even a 25 year mortgage, but a lower payment to start isn't a bad thing and then throw money on it later in life when you are able. You can't stop idiots from buying whatever, whenever, so I would personally like the govt to butt out and let capitalism work like its suppose to. If someone will lend the money under whatever terms, then you are good to go.

You bet , as long as those loans aren’t guaranteed by taxpayer funded mortgage insurance . MICC failed completely in the 1980’s and CMHC lost millions, taxpayer $$$$. Capitalism isn’t really capitalism if you’re risk is covered by government insurance !

 

[ABMax24]

Most real estate generates income, whether it be passive or active. I have owned 7 houses in my life so far and I only lost capital $$ on one of them. And if I would have held on to the damn thing a bit longer, it would have paid off as well. Agree one shouldn't be using a 30 year or even a 25 year mortgage, but a lower payment to start isn't a bad thing and then throw money on it later in life when you are able. You can't stop idiots from buying whatever, whenever, so I would personally like the govt to butt out and let capitalism work like its suppose to. If someone will lend the money under whatever terms, then you are good to go.

You bet , as long as those loans aren’t guaranteed by taxpayer funded mortgage insurance . MICC failed completely in the 1980’s and CMHC lost millions, taxpayer $$$$. Capitalism isn’t really capitalism if you’re risk is covered by government insurance !

The system isn't setup that way though, look at the 2008 financial crisis for proof. The broker, guy at the bank, or the bank itself aren't the ones backing the mortgage or the ones on the hook if the debtor fails to repay the mortgage.

Mortgages are bundled together and sold as mortgage backed securities or bonds which the CMHC stamps as approved and guarantees, and then are sold to investors or in the case of the money printing during COVID, to the government of Canada.

Either way if mortgages in Canada fail it's the taxpayer on the hook for the cost.

Financial markets and the banking sector needs regulation, as evidenced by history certain actors will sacrifice the entire global economy for their own greed. Governments job is to establish and enforce rules to prevent this from happening.

 

[LennyR]

The system isn't setup that way though, look at the 2008 financial crisis for proof. The broker, guy at the bank, or the bank itself aren't the ones backing the mortgage or the ones on the hook if the debtor fails to repay the mortgage.

Mortgages are bundled together and sold as mortgage backed securities or bonds which the CMHC stamps as approved and guarantees, and then are sold to investors or in the case of the money printing during COVID, to the government of Canada.

Either way if mortgages in Canada fail it's the taxpayer on the hook for the cost.

Financial markets and the banking sector needs regulation, as evidenced by history certain actors will sacrifice the entire global economy for their own greed. Governments job is to establish and enforce rules to prevent this from happening.

Yup , I agree , that’s the reason I said “ as long as it’s not !
Government insured , is taxpayer insured !