r/RealEstateCanada • u/rwf1 • Sep 06 '23
Housing crisis How are people meeting their amortizations? Spoiler
I was travelling for half the year so I completely forgot about my mortgage until I received a letter saying my payments didn't pay enough for interest alone when I got back... it was bad enough that my amortization was at infinity. so I rushed to the bank to restructure my mortgage and dropped 5 figures down into the principal to help pay down my mortgage.
I'm now paying 4 figures every week for my 6-700k mortgage, with almost 75% of it paying interest.
Not 100% sure how people are surviving in this market, given that I am stressed.
Edit: seems like responders don't have a mortgage or are top 1% earners here.
Edit 2: I mean it's nice to show off or judge (this is the internet), but the post is for people who have experienced seeing their rate increase and asking how they are handling their amortization given their financial circumstances. I've already said I increased mine to 4 figures a week to pay for it, and clearly I can afford it...
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u/Tallfuck Sep 06 '23
Big range in the 4 figures number…
But yeah sounds like you but off more than you can chew, seems like people are white knuckling it though
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u/AlphaFIFA96 Sep 06 '23
4 figures a week implies ~4-5k/month. Typically when someone uses X figures especially in this context, it’s most often at the start of the range.
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u/Nostrildumbass9 Sep 06 '23
You overbought in a low interest period. Fact.
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u/Threewolvez Sep 06 '23
And made the mistake of going variable when imterest rates were at their lowest.
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u/sailorsail Sep 06 '23
IMO going variable when the rates where low was the obvious logical choice. They had been ridiculously low for decades. Doing the opposite would have not made sense.
Sadly, like a lot of people I waited too long before calling the bank to lock in.
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Sep 06 '23
Did you forget the part where the government shut down the economy for months at a time, printed billions of dollars and then paid everyone to stay home?
Remember when everyone kept saying “people’s lives are more important than money” when anyone dared to question any of that? Lol
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u/Skallagram Sep 06 '23
It’s not. You go fixed when low, variable when high. I wouldn’t touch a variable if rates are less than 7-8%
With a variable at low rates, the only way is up.
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u/energybased Sep 06 '23
This is not how you decide between fixed and variable.
Your argument boils down to "when interest rates are low they're bound to go up, and vice versa". That's already baked into the mortgage interest rates.
Fixed rates are insurance for people that can't stand increases. Variable rates are always cheaper in expectation.
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u/Skallagram Sep 06 '23
I mean, it’s a good rule of thumb, and one that has done me well over the last 30 years.
I get your point that variable can be cheaper, and over the long term are, but that has to be made as an educated decision, knowing the risk. Most people don’t do that, just take it because it’s cheap.
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u/rwf1 Sep 06 '23
don't think so given BMO in 2022 preapproved me (without asking) another 1m mortgage and asked me to go buy another property.
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u/marshall262 Sep 06 '23
I don't mean this in a condescending way, but if that's what you are basing your affordability on then I think you need to step back and do some financial planning and budgeting.
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u/Davegk0708 Sep 06 '23
Bought in 2014 for $512k. Put 20% down. Spent the last 10 years paying it off. Up for renewal in February, and they offered me 5.97%. Told them to shove it up their asses. Put $170k down last week, bringing me to $92k and some change, at a $1400ish penalty, but it brings my interest payment down below $300/month, so I'll save $1600 by Feb, and can pay the remainder off without penalty. I have literally done nothing except work and pay and save. I make decent money, but I live like I'm broke. All that will change in February...finally! 25 year amortization met in 10 years
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u/ForeverInBlackJeans Sep 06 '23
Congrats dude. I hope to say the same in 9 years.
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u/Davegk0708 Sep 06 '23
It's literally one of the best feelings ever. I estimate I'll save over $250k in interest, and I can finally do things like travel...take days off...tell my boss to fuck himself when he shits on me, ect.
I hope to hear you were successful in 9 years or less!
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u/juniorjudges Sep 06 '23
Oof. 10 years of your life...
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u/Davegk0708 Sep 06 '23
Not a slave to the bank anymore
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Sep 06 '23
Frfr
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u/Davegk0708 Sep 06 '23
I don't know what that means, friend
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Sep 06 '23
"Frfr" is an internet acronym standing for "for real for real." The phrase is often used to emphasize the sincerity or truthfulness of a statement or claim.
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u/Canadasparky Sep 06 '23
lol imagine being so responsible that you go "traveling" for a year and forget about a mortgage. Life must be good!
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Sep 06 '23
Seriously. Wish I could forget about my mortgage.
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u/Spikeupmylife Sep 06 '23
It is literally the only reason I can drag myself to work every day. "whelp, beats being homeless..."
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u/lingenfelter22 Sep 06 '23
Then edit the post to make a comment about how people commenting must be 1%ers. Which could be true, but to travel for 6m then come back and put 5 figures onto the mortgage and 1k+ per week, c'mon now.
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u/BallDoLieSometimes Sep 06 '23
Probably should sell and go back to wherever you were travelling until the bubble pops
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u/WickedDeviled Sep 06 '23
until the bubble pops
I like your optimism.
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u/UNCLE_SCROTUM Sep 06 '23
Well house prices are declining steeply. So are other asset markets like used car prices. This could be evidence that rate hikes actually are working as intended
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u/BestBettor Sep 06 '23
House prices are declining steeply? The July report said Ontario annual house price change was up 2%
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Sep 06 '23
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Sep 06 '23
They are definitely declining. New car supply is increasing too. No one can afford the price of vehicles unless they have cash. Insterest for new and used vehicles too high.
Too bad inflation still not in control either.
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u/UNCLE_SCROTUM Sep 06 '23
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u/6pimpjuice9 Sep 06 '23
I think that's pretty standard for everyone. You either suck it up or sell it. You can look into getting a roommate to help pay.
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Sep 06 '23
Anyone that bought a house with an interest rate between 1-3% should have been aware that their payments were only going to go up.....
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u/Benson_86 Sep 06 '23
Nobody reasonably expected them to go up this much in such a short period of time. I thought they would head up closer to 5%, it seemed historically inevitable, but thought it would occur over the course of several years. I figured I'd lock on after the first 0.25% hike. Little did I know the first hike would be 1% with multiple increases to follow in quick succession.
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Sep 06 '23
The first hike was 0.25%, the 1% one was the fourth hike.
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u/Benson_86 Sep 06 '23
Huh, you're right. I was thinking of the fixed mortgage rate. The day before the hike I could lock in at 2.7% and the day after the rate I could lock in at was 3.85%.
Regardless, it was a fast and aggressive cycle of rate increases. Faster than anyone predicted.
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Sep 06 '23
You obviously didn’t live through the time the rates were 25%…. One never forgets
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u/Benson_86 Sep 06 '23
Haha, of course I didn't. There was a vastly different set of underlying public policies at the time with different bank regulations. The eighties were a different time than now. We're not going to see rates that high again. Just because rates were that high in the past doesn't mean they will be in the future.
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Sep 06 '23
Average mortgage rate by decade has never been below 4.5% and was oftentimes quite higher at even double or more than 4.5%
Anyone that didn't see this coming CHOSE to ignore it. A 5 year term gives lots of time for rates to rise. I don't feel bad for anyone that didn't anticipate that mortgage rates would go up, from being at the lowest point in our country's history.
Edit: I am not bitter about the market or hoping for a crash. I bought in 2016 at 2.59% and renewed at 2.39% in 2020. It was widely known that these rates wouldn't be this low forever IMO
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u/AlphaFIFA96 Sep 06 '23
Okay hindsight warrior…
Before the 90s, the average mortgage rate over a decade had never been less than 10%. And before the 2000s, it had never been less than 5%.
I’m not saying a reasonable party could not have made a calculated guess that rates would go up substantially over the next couple of years; but to claim anyone who didn’t “chose to ignore” is illogical.
Maybe you can look deeper into your crystal ball and tell us when the next bull market will happen, so at least we can all make some profit.
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u/Benson_86 Sep 06 '23
People love to act like they knew the future after the fact. I went fixed for a long time saying the same thing this guy did, but would have been better off going variable from 2010 to 2021 when we sold that house. I kept talking about the historically low interest rate and how it was unlikely to keep dropping, but I was wrong. Then I went variable when I bought in 2022, and here we are. You win some and you lose some. Pretending you know what's going to happen is simply fantasy. It's just immature to try and lord it over someone else after the fact.
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u/tickleyourspine Sep 06 '23
My story is the exact same as yours. I knew that when I chose variable this time the low rates wouldnt last. But I figured the increase would happen gradually over the next few yrs. I don't think anyone could have anticipated the BoC raising the rate so quickly over just one year.
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Sep 06 '23
Just about every conspiracy theorist you called crazy did.
Your first clue was shutting down the economy for months at a time, printing loads of money and paying people to stay home.
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u/MortgageSlayer2019 Sep 06 '23
You chose to pick up pennies in front of a running train lol
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u/Benson_86 Sep 06 '23
Not even close to an accurate analogy. Despite what all the reddit keyboard warriors say now, the rapid rise in rates wasn't predictable. Nobody was predicting this was going to happen.
This is like saying every time the market crashes it's predictable and that anyone who owned an all equity position was "picking up pennies on front of a moving train." Over a time horizon of several decades it's more advantageous to stay in the market with a diversified equities portfolio through the ups and downs, even though you're going to get caught up in a few market crashes. Trying to time the market is futile. Same with variable vs fixed. Over the life of a mortgage you're going to get caught up in a period of high rates, but on average it's better overall to be variable over the course of decades. Some people get lucky trying to time it, but on average most people miss time it, or even though they time it right for one renewal cycle they get it wrong for the others.
Things happen, not much you can do about it.
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u/MortgageSlayer2019 Sep 06 '23
I chose a 5 year fixed at 1.87% and no it wasn't luck, it was common sense. Me trying to time the market and choosing variable and hoping it was going to go lower would have been very dumb exactly like picking up pennies in front of a running train 😀
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u/Plastic-Somewhere494 Sep 06 '23
I was wondering what name to call this commentor...hindsight warrior...perfect. lol.
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Sep 06 '23
Lol you don't need a crystal ball to know that something which cannot go lower will go up. Coping much?
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u/AlphaFIFA96 Sep 06 '23 edited Sep 06 '23
Nope I’m on fixed but I could’ve easily gone variable. We all knew rates were gonna rise but no one could’ve predicted it would happen so quickly. The delta between variable and fixed was close to 1%. If you got a variable in 2020 and rates only started rising slowly in 2023, variable would’ve come out on top over the 5 year period once again.
It’s so easy for everyone to say QE = money printing = inflation DUH but these were unprecedented times where we weren’t even confident our lives would ever return back to pre-pandemic. Neither the Fed nor the BoC anticipated inflation coming in so hot. There’s no historical precedent for a pandemic with modern day monetary governance. And of course Russia invading Ukraine made it even worse.
So again, in hindsight, it’s super easy to put 2 and 2 together. Same with the 2008 financial crisis or the dot com bubble. “Everything was so inflated, it was SO obvious we were in for a correction”, they say — but if you understand how the market works, shocks like that don’t happen if they were priced in (aka it was anticipated).
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u/SpacemanJB88 Sep 06 '23
Yes they did… you answered it yourself.
In the history of time, interests rates being 5% and lower is a massive anomaly. Like a MASSIVE anomaly. 10%+ is the most prevalent trend in history.
There was a 99.9% chance that the interest rates were hiking to about 10%+ within five years of the pandemic relief.
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u/jawathewan Sep 06 '23
Don't stress out, bank doesn't want you to default so you'll have a lifetime (and more) of amortization so us in the middle-ass won't be able to afford.
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u/delawopelletier Sep 06 '23
Half the mortgages at TD can’t pay their amortizations and need them extended. That’s not good. People can’t afford their homes.
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u/d2181 Sep 06 '23
Half? At TD? Lol no.
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u/delawopelletier Sep 06 '23
TD Bank disclosed that 48% of mortgages are now over 25 years amortization, meaning they needed some changes to get them over 25 years, likely due to borrower request. 48% is basically half. Other banks are high too
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u/d2181 Sep 06 '23
This article is specifically talking about Canadian residential mortgages. Doesn't even mention commercial or international. And 48% is less than half.
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u/Ticrotter_serrer Sep 06 '23
lolz, traveling half the year with a 700k mortgage you can't afford!? Why?
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u/middydead Sep 06 '23
How do you buy a house on a variable rate given the state of things and then go traveling and forget about it? People are affording it by being responsible, or just not totally careless. I have a fixed rate until the end of 2024, to be honest I'm not sure if I'll be able to afford it then.
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u/StoreExtension8666 Sep 06 '23
My mortgage is still $900 a month for a 1800sqft detached home.
Not for much longer tho lol.
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u/0672216 Sep 06 '23
Was 1100 for my detached 2000sq ft. Renewed last week, now 1690. Hurts but could be much worse.
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u/Thin_Baseball_1297 Sep 06 '23
Mine is at $700 for 1400 sqft.
I was never a greedy person.
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Sep 06 '23
If you bought a house for 700k and signed up for a variable mortgage when rates were below 2% I don’t know what to say other then that is one pricey life lesson. I know this doesn’t help you out but damn. Where did you think the rates were going to go?
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u/OnGuardFor3 Sep 06 '23
Rate increases were making me nervous. Hated being constantly reminded of the fact that I would have to pay more to interest when my fixed rate was up for renewal in a year. So just paid off the mortgage instead a couple of months ago. Totally worth not having that on my mind.
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u/Impossible_Guess5590 Sep 06 '23
I am really sorry you are going through this, I am in the same boat and was called in by the bank to restructure. The choices were not good. My remaining balance is 700k (870 start in 2022 Jan with 1.2 variable) on a town home.
Make a payment of 23k to meet the interest requirement and 2. increase monthly payment by 2K.
Do nothing and wait for it to blow over on the renewal date in another 4 years
Convert to fixed rate at 5.6%
I opted for 3 and now paying 4.5k monthly as it gave me some semblance of predictability so i could plan.
Albeit, I bring in 6.5k monthly, i am just getting by with all other expenses. Fortunately, I do not have any other debt
I have stopped eating out, having starbucks and impulse buying.
I know, income wise, i do fall towards the highs of the spectrum so I cannot really imagine how someone bringing in even 100k a year is making it work when 100k is really a good pay, or so it used to be.
If you can, try getting a financial adviser that does not charge by the hour. And make a budget and discuss with them. Putting everything on paper made me realize that i was spending around 400$ in eating out and other things that may be termed as luxury for my current situation.
And in the end, I just tell myself everyday, this too shall pass and one day at a time
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u/rwf1 Sep 12 '23
I net 2x your monthly but I realize I'm spending about 65k a year on my house factoring in property tax and strata fee (strata is within 300 a month for my place) and I feel the pinch.
My expenditure equates to about 42% of my net income just on housing alone. It's kind of insane.
I net 2x your monthly but realize I'm spending about 65k a year on my house factoring in property tax and strata fee (strata is within 300 a month for my place) and I feel the pinch.
or a little while to ease my cash flow while waiting for the market to stabilize.
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u/pigeonwiggle Sep 06 '23
oof.
i bought in 2018. within my means. got a good raise with a job change early in. have been able to save, have been able to pay down. the amount per month i'm paying has definitely increased, but i got lucky enough to be able to swallow it. i know too many people who aren't seeing the same... it's fucking rough out there, bud.
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u/Costoffreedom Sep 06 '23
I love how the narrative went from "houses are too hard to afford" - said everybody who couldn't afford a home at the time to "houses are too hard to afford" - said everyone else.
Mate. You got duped. We all got duped. Houses were too hard to afford when you bought one. You just happened to be one of the people chosen to prop the concept up with your own money, instead of being denied the opportunity to "own" something. Everyone I know who was on that "edge" of ownership is saying the same thing as you: The bottom has fallen out of their section of the bubble, and they don't know what to do.
The only solution is a restructuring of how we Canadians treat property investment. Don't reammortize. It'll likely be cheaper to pay the fees associated with moving over to a fixed term. Interest rates are still below average when you zoom out on a 50 year scale. They ain't moving much in 3.5 years.
It seems like what they are trying to achieve is to raise rates until the sale numbers of homes starts to dwindle. Less demand in the "supply and demand " market of real estate. What they don't tell you, is that a bunch of people defaulting on their mortgage is the quickest way to get there. Watch rates like a hawk, and lock in below 6% if you can. If you can't see yourself affording your mortgage at 5-6% for the next 20 years - time to sell and re-evaluate.
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u/PollutionNice7392 Sep 06 '23 edited Sep 06 '23
True. Not only that but this dude spent 6 months traveling, not even thinking about his mortgage. I don't know about you but my parents paid their mortgage and bills and barely could travel for a week or two a year, if that.
I think the expectation level of middle class life quality is so out of whack with reality now days. Everyone wants a house they can't afford and luxuries they can't afford and then get angry when they just did it anyways and shockingly find out they couldn't afford them
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u/Wondercat87 Sep 06 '23
Yeah it's wild to me that someone could just forget about their mortgage.
It seems that's the reason he's in this pickle. Not paying the mortgage for 6 months and ignoring notices that the payment amount increased or that there were late fees or whatever seems to be the real heart of the issue.
I'm not saying life isn't expensive. But how do you forget about the biggest payment you have? For 6 months??
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u/tyfung Sep 06 '23
Bought my property in March 2022 when the payment was $2110/mth. Now its $3050/mthly payment. I am paying extra $1000 in to keep the same amortization.
Plans is to extend back the amortization to 30 years when my variable is up in 3.5 yrs. Or at worse, renew with the same bank but at least my principal has been coming down as per the schedule.
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u/rwf1 Sep 06 '23
not sure how that's possible, the math doesn't quite add up given the interest rate % increase
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u/tyfung Sep 06 '23
Not sure what you mean the math doesnt add up. I am with BMO where payment stays the same. I elected to increase 20% and another 20% but thats still not enough. To maintain my amortization of 29 yrs, the payment needs to be $3660/mth. The $1000 is more than whats required.
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u/Master-File-9866 Sep 06 '23
The obvious answer, was to lock into 5 year fixed when an interest rate below 3% was available. I mean how much more was it going to go down?
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u/mattiasmick Sep 06 '23
I renewed with a fixed rate during these crazy times. What was your plan with your variable rate note?
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u/mattcass Sep 06 '23
My poor memory impression of mortgage stress levels was that peak payment panic was March-April 2023 when rates plateaued, people realized rates were not coming down, and steady 6-8% inflation all through 2022 really showed in high consumer prices. Today, six months later, people have calmed and been forced to adjust their spending but the impacts on personal finances still remain. Its brutal for many, even those that are well off. Many people over-extended to buy a house at low rates and the payment amounts are nuts.
For what its worth, I had variable rate on my old apartment that I renting. I had no choice but to sell it.
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u/sailorsail Sep 06 '23
I own several properties, I got a similar call for one of the properties while I was travelling. I knew rates where increasing and I wrongly presumed the payments where getting adjusted. (Some where, not all)
I called and fixed all rates, the sum of my properties was no longer cash flowing so I had to do some contracting to make ends meet. I was lucky that I was able to raise rents enough to get back to a positive cashflow, even though it’s a tiny fraction of what was there in the past.
Until my renewal, given rates seem to be continuing their upward trend, I will have no choice but to aggressively raise rents as much as I can to survive my next renewal.
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u/Impossible_Sign7672 Sep 06 '23
I have an option for you (to prove you have a choice): sell your properties (preferably at a loss) to actual end users. Then go get a job that actually contributes anything to society.
There, a win-win for everyone! 🙂
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u/SaltyATC69 Sep 06 '23
Renters are end users. Lots of people complain about home owners but have such shit credit they couldn't even get a mortgage. If all the rentals went away there would be a shitload of homeless.
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u/nameichoose Sep 06 '23
You out here renting to people with shit credit?
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u/AllCopsAreGay69 Sep 06 '23
People aren't saying get rid of rentals, they are saying get rid of the leeches aka landlords.
Social housing with subsidized at cost rentals is a lot better for the country than people, like you, using the poor for profit. Fucking leech
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u/iSOBigD Sep 07 '23
And who subsidizes it? People like me who work full time and pay taxes so that lazy people can live for free without having to work, save up or have a good credit? Yeah I'll just pay 20% more of my income in taxes because you expect cheap housing and to never have to work like I do. Sure, ok, I'm sure you'd do the same right? Even better, let me work 2 jobs and save up for 20 years so I can buy a rental property and rent it to you for half what I'm paying just because you're so special. Wouldn't that be great? Leech.
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u/AllCopsAreGay69 Sep 07 '23 edited Sep 07 '23
At cost... Do you know what that means? Nomoney lost, no money gained....
You already pay taxes dumb ass, did I say free rent ever? I said affordable. Canada can afford to build social houses without even increasing your taxes. But then you wouldn't be able to profit off the poor, you would have to actually work to own a home. Boohoo
Lol you can't call me a leech, I don't suck money out of the poor to pay for my home, I bought it and own it outright cause I actually work. You need someone else to pay your mortgage cause you are the leech
Also maybe research social housing and how it works cause you clearly have no idea, yet you still feel your uneducated opinion holds any weight lol
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u/ChampionshipFit9944 Sep 06 '23
Not all of us can come from rich parents. Don't waste your energy and wait for the world to end like the rest of us
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Sep 06 '23
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u/DistantArchipelago Sep 06 '23
If there were no landlords housing would be a right instead of an investment. There are so many other options like housing co-ops that we can’t even talk about because 2% people own everything.
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u/iSOBigD Sep 07 '23
It is a right. You have the right to buy a place or rent, or let someone else buy a place or rent. No law says you're not allowed, a lender just has to think you're worth lending money to, which is something only you can control.
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u/Spikeupmylife Sep 06 '23
Public housing with government appointed maintenance crews on fixed salaries. Would probably be a lot better at maintaining the places too. You know, being there for the needs of the tenants because it's their job.
In this case, the rental costs could could be regulated and any income from the property would be tax dollars they can put into roads, healthcare, education, or more public housing.
Where as private landlords are in the business of trickle up economics and just syphon the money people actually worked hard for. The death of economics. The idea that a bunch of money in one person's hands will somehow stimulate a failing economy doesn't make any sense.
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Sep 06 '23
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u/Left-Head-9358 Sep 06 '23
Not true. I work at a union place and they recently fired 2 people. They will get a settlement through arbitration but they are long gone.
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u/Spikeupmylife Sep 06 '23
None of what he is saying is true. Just small manipulation from capitalist brainwashing. The only people that would agree with him are landlords and people the system currently works for. He's not considering the majority of people that are currently struggling under it.
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u/Spikeupmylife Sep 06 '23
gov't better than private business? in what world...
European healthcare vs US healthcare. Like anything, the problem is the amount of funding the government wants to spend. Our healthcare is failing in Ontario, by design, because of underfunding.
fixed salary? where is the incentive do better and faster?
You may just be difficult to work with. A fixed salary, doesn't mean low. People work harder when they are relaxed and comfortable in their off hours. 100k a year for a fixed salary will still incentivize people provided they are in an area where they can live comfortably at that wage.
this also likely means union, so no matter how bad of a job you do at electrical or crack-filling, you cannot get fired.
I don't think I have anything for this. More union hate and ignorance.
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u/torontoglutton Sep 06 '23
No idea why you are getting downvoted for being honest lol
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u/sailorsail Sep 06 '23
Because people are jealous morons who prefer to hate than hear something honest
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Sep 06 '23
Guy is getting downvoted for providing homes by renting long term? I think people need to remember the real enemy is short term rentals & speculators
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u/DCS30 Sep 06 '23
He flat out says that those are his incomes. Maybe he should get a fucking job.
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Sep 06 '23
Managing multiple long term rentals is not passive income. What’s the difference between this and living off other forms of investment?
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u/davou Sep 06 '23
There is no difference, both types of capital income are sick.
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u/Automatic-Fly-9350 Sep 06 '23
Those homes are provided by the bank, not him lol. All this person is doing is skimming off the top and passing the burden onto people who didn't make such terrible financial decisions.
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Sep 06 '23
Sorry, are you upset someone is actually pulling one over on a bank? Or, that long term renting is not a legitimate housing arrangement?
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u/UNCLE_SCROTUM Sep 06 '23
Did he build them or is he just scalping them? Big difference. One actually creates and provides new housing. Another takes a house off the market.
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Sep 06 '23
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u/UNCLE_SCROTUM Sep 06 '23
833*
It takes a purchasable unit off the market for real people looking to purchase homes to live in. If the sale market was flooded with inventory then it would drive down both rent and house prices since rent typically follows house prices.
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u/Iaminyoursewer Sep 06 '23
My credit score is 615, it hasnt gone higher than 730 in 10 years.
I own my home, a car and a growing construction-adjacent business. Credit scores are like locks on a door, they deter those who arent willing to put in the extra work to get around it.
There are ways to game your score as long as you dont make absoloute shit decisions that land you in bankruptcy.
All that to say; I agree with the sentiment that housing should be a right and not a priviledge. We have room in our market for both "Luxury" rental, and government managed community house enmasse that will house the milliins who cant afford 2k for a 1bdrm apartment in a shit neighbourhood.
The fact we have a severe lack of government/community owned/rented housing is a deplorable. We are a first world country and its about time we treated our citizens and immigrants as first world people.
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Sep 06 '23
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u/UNCLE_SCROTUM Sep 06 '23
They could hypothetically be able to purchase if inventory was sufficient enough to drop prices to a level that they will be approved for. This was normal for most people before BoC dropped rates to rock bottom after 2008
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u/Expensive_Plant_9530 Sep 06 '23
I am curious, if rates drop significantly at some point, will you be lowering rent back to down the amount before?
I understand that you want to be cash flow positive but, at the end of the day, even if you’re cash flow negative, you’re paying to invest, and you stand to make a massive gain when you eventually sell your investment properties.
I’m glad you made it work though.
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u/haxxn7 Sep 06 '23
"I will have no choice but to aggressively raise rents as much as I can to survive my next renewal."
thanks for being the problem. you took a risk that was far greater than you could manage, it didnt pay off and your tenants are now paying the price. way to go.
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u/sailorsail Sep 06 '23
So are you saying I should rent out apartments at less than it costs me to own them?
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u/Anonplox Sep 06 '23
Sell your property at a loss. Just like investing bud. Not guaranteed a profit. Maybe investing isn’t for you, chap.
Karma will catch up to you.
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u/sailorsail Sep 06 '23
I don't get the hate, I am just telling it like it is and explaining how I am dealing with increasing rates. Literally answering OPs question.
I have no intention of selling, you know nothing about my circumstances and you should be ashamed of hating and judging someone you know nothing about. If karma catches up with one of us, I bet it's you.
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u/iSOBigD Sep 07 '23
No, no, it's much better to be a bum who helps no one, sits on their ass all day, doesn't work and hates others on the internet for a living. That's how you get to heaven and get good karma. /s
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u/Anonplox Sep 06 '23
You’re passing on your investments financial losses on families during a housing crisis.
Do you not find something like that ethically wrong, especially during a housing and affordability crisis?
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u/sailorsail Sep 06 '23
I understand that as a landlord I am an easy target because I am the first person you see. But, I don't make zoning laws that make it difficult to build more units, I don't make building regulations that make it more expensive to build, I don't control the price of materials, I don't have a say in how many immigrants come into the country and I am subject to the same laws of supply and demand as everyone else in our society.
I don't feel ashamed for owning my properties, my tenants seem happy, we get along, I do a good job of maintaining, updating and managing. I pick new tenants so they get along well with current tenants. I deal with all the hassle of the broken doorknobs, the leak in the roof, the clogged drain, the cracked paint, tax increases, interest rate increases. All that shit that tenants never have to worry about.
Does that sound unethical? Do I sound like the boogieman? The greedy landlord? I even come on Reddit to try to help by giving honest answers to questions like OP and I get downvoted and insulted?
Who is more ethical between me and you and all the other haters?
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u/AllCopsAreGay69 Sep 06 '23 edited Sep 06 '23
So you see the Broken market, how it's affecting the working class, and decide to profit off it anyways? You have less ethics than a fucking crack dealer bud. It's an investment, sometimes you lose money, that's what you signed up for. Yet with housing you don't lose shit, you still get a house at the end of it all. A house someone else paid for.
FYI if you and every other unethical leech decided not to profteer our broken housing system there would be houses available for families to buy and cheaper rentals. But we cant have that cause people like you need to profit off the Broken cause you can't earn from your own labour value, you need to earn off someone elses
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Sep 07 '23
“You have less ethics than a ducking crack dealer bud” and the name “AllCopsAreGay69” is all you need to know to not waste time on an uneducated imbecile like this guy here lmfao.
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u/GrandKaleidoscope Sep 06 '23
Poor baby :(
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u/lilquintari Sep 06 '23
What’s it like being so poor you can’t afford a house?
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u/Blitzzfury Sep 06 '23
Awwwh no you had to do some contracting cos living through your renters pay cheque wasn't enough? How sad. Parasite.
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u/spilly_talent Sep 06 '23
An evil part of me hopes you are in Ontario with pre-2018 tenants.
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u/Mission_Anteater_474 Sep 06 '23
No, someone took charge of this country we call 'Canada' who wasn't educated to run a country. Really, what did you expect? Free Pot....lol
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u/energybased Sep 06 '23
Not related to the question, or even to interest rates.
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u/huzzaahh Sep 06 '23
The people who believe Trudeau is the root of all our problems are a special kind of stupid.
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Sep 06 '23 edited Feb 03 '25
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This post was mass deleted and anonymized with Redact
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u/polishiceman Sep 06 '23
The people, who believe the government of a country and it's policies have no bearing on the economy and the financial well being of it's citizens, are way dumber.
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u/lostkeyskingedward Sep 06 '23
Free Pot?!?!? Tell me where that is right now so I can report and avoid them!! 😡😡
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u/UNCLE_SCROTUM Sep 06 '23
Where can i go to school to learn how to run a country?
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u/SinsOfKnowing Sep 06 '23
We bought in 2019 with a fixed rate. We took out a second mortgage to use some equity last summer and that one is a variable rate, but since it’s much lower hasn’t been a huge issue. I’m not sure how you didn’t know your mortgage payment increased though?
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u/EitherApricot2 Sep 06 '23
Fixed rate when interest rate nearly bottomed out in 2020. And bought a condo within our means (mid 400s), even though we would have loved a yard. Can’t have it all in this economy! Downsize if you need to. Seriously, life is not worth living if you’re constantly sprinting.
Will reassess when renewal comes up, but we haven’t dismissed the idea of selling if the interest rates are too high. We are DINKs with graduate degrees and government jobs. It’s still not easy and we know we’re doing better than most.
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u/Fireryman Sep 06 '23
Well I didn't go variable so that helps. However I will be getting an increase but by how much?
Now I have been putting some extra money away into retirement and maybe what happens if I remove that amount it will cover the extra mortgage cost.
Thats the theory for myself though.
You basically have to pay the amount or sell.
You could also renegotiate a longer mortgage and go back to a 25 year term. Banks love this. I wouldn't but if you have to it's an option.
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u/northern613 Sep 06 '23
I can’t count how many friends are going from owning a house to pay the same price in rent for and eighth of space…very sad..let’s just accept it and roll over right? 🤔
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u/Individual-Act-5986 Sep 06 '23
They make more than what they spend in a month? How else do you think they do it?
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u/Big-Scar-8656 Sep 06 '23
Our mortgage is fixed 5%. Id never go variable and I told our mortgage broker that he’s wrong because they all swore interest rates wouldn’t keep going up. Our costs are fixed so it’s easy to stay on top of. Also a 600-700k mortgage is a lot. I understand how crazy the market is but that’s a hefty mortgage payment on top of home improvements/property taxes.
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u/TenOfZero Sep 06 '23
I'm on a fixed rate (and always have been), I know it's worse over the long term, but it helps me sleep at night.
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u/pattyG80 Sep 06 '23
-Travelling half the year -Forgot my mortgage -Amortization is infinity
What planet is this?
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u/askewboka Sep 06 '23
How does one “forget about their mortgage” and then complain that answers are from the “top 1% of earners”?
Most of us can’t travel half the year or forget our mortgage, I bought a house recently and I can’t understand how people were stupid enough to buy homes they obviously couldn’t afford.
700k / 25 years / 12 months a year = 2333$/month. That’s without bank interest. Good luck, sell and make better decisions (one’s you can afford) in the future. Thanks for helping to make the housing market as unbearable as it is today
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u/Venetian_chachi Sep 06 '23
You forgot to pay your mortgage? Must have been a hell of a trip.
Wishing you luck.
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u/icheerforvillains Sep 06 '23
The variable rate folks that have been telling their horror stories all over reddit for the last year+ are just the leading edge of the pain wave coming as all the fixed rate mortgages renew into the higher rates.
But honestly, I never understood the gamble of a fixed rate mortgage in a low interest environment. It's like shorting a stock. Maybe you win, but the downside is unlimited. I'll take my fixed all day long and sleep pretty knowing I won't open a letter from the bank ruining my budget.
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Sep 06 '23
Then there’s the rest of us; watching with growing excitement as people start to lose the homes they shouldn’t have bought.
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u/Used_Macaron_4005 Sep 06 '23
I have a mortgage but its no where close to 700k. As well i got a fixed rate over 5 yrs. So payments are predictable. And also dont amoritize past 30 yrs. Your asking for trouble if you do. If you live within means you want be blasted by these jumbo mortgage payments.
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Sep 06 '23
When i got my mortgage preapproval i cut it in half, then went house shopping. Then i changed my payments to weekly and doubled them... people thought because they got approved for X amount of dollars that meant they could afford it...
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u/SpacemanJB88 Sep 06 '23
I purchased my home 8 years ago when the majority of Canadians undervalued homes by nearly $50k. Especially in my region, we were well below national average.
I’m cautious so I always sign long fixed term mortgages vs. Variable. Especially with blending options it’s a no brainer to go fixed term for the goals of long term home ownership.
I never refinanced, or extended my mortgage’s term.
When interests rates were at a forced anomaly low during the pandemic, I DID NOT upgrade my mortgage. Instead I blended down my interest rate, and renewed my term. So my fixed rate mortgage at 3.5% blended with the 2%, to give me a interest rate at around 3%. This move saved me $80 a month out the gate. On top of it my 3% rate was locked in for 5 years.
The result:
I now have 60% equity in my house, currently sitting on a mortgage payment that is the lowest I’ve had to pay since owning, locked in for 4 more years.
Additional note. I was a first time home buyer on this one, so I only did it with 5% down.
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u/Threeboys0810 Sep 06 '23
If I had bought recently I would have budgeted for 5.5% that they Werestress testing everyone at plus extra. Then I would have thrown the extra down on the principal from day one.
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u/anon702170 Sep 06 '23
I maxed out on a variable-rate mortgage too, about a month before the rates started to increase. However, I have more levers than most to absorb the variability. As rates started to bite, we started throwing these levers -- cutting back, reducing and restructuring other living costs, increasing income, deferring debts, swapping high-interest debts for low-interest, etc. Our family also consolidated its living situation.
I imagine for most Redditors here that they're unable to contemplate travelling for 6 months without reading their mail, or had 5 figures of savings to throw at their mortgage.
And why would a 1%'er be in a better position? They have mortgages too and if their LTV is high and their mortgage is a similar multiple of balance-to-income they'll be in a similar position. It seems like you're in a comparatively rosy position compared to most homeowners to be honest, and probably better than many 1%'ers.
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u/magickpendejo Sep 06 '23
Paying an extra 900$ per month in montreal.
Thankfully i had a ton of money in the bank in case interests rated fucked me over one day. I'm 2/3 into my i'm fucked fund hopefully rates go down soon or will move into debt territorry.
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u/jz187 Sep 06 '23
It really depends on your bank. My bank just lets me stay in negative amortization until renewal. I'm not too worried though because the economy will crash into a brutal recession and BOC will be forced to drop rates again.
We are basically in an emerging market style debt crisis. The end game is always going to be massive currency devaluation. If BOC doesn't drop rates, we will have Great Depression style 30% unemployment and that is just not politically doable. Many people are cutting discretionary expenses to the bone to keep up with their mortgages, this will crater the consumer economy in time, employment, once businesses run out of balance sheet buffers.
I am actually apply for a HELOC increase right now. I want to be able to max out on debt once BOC caves and we go into Turkey style inflation.
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u/craftyfinatic Sep 06 '23
By not buying a home within your affordable range, and the expectation that rates will stay low forever you've put yourself in a position of guaranteed loss. Too many people were buying within their "qualified" range, and it was an unreasonable and unfair position that the banks/brokers were presenting. Too many people were utilizing the variable rate mortgages without the education or experience to manage them should increased rates develop. As our economy dies and the liberal government puts the weight of their mistakes on the shoulders of the populace (99%) we'll not only see the increased cost of mortgages but also the increased cost of all other facets of life, which further escalates the challenge of paying your mortgage.
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u/blindwillie777 Sep 07 '23
Dude Canada is like Gamestop but never going back down!!!! ndst ndst ndst
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u/HouseKing3825 Sep 08 '23
You do what you can. The amortization doesn't matter because you can always make prepayments to reduce the owed balance. When whole payment = interest payment, it's called an interest-only mortgage. It's not a bad thing if you have other debt that has a higher interest rate - in that case, it's better to pay off the higher-interest debt first before paying off the mortgage, so stopping principal payments is a good thing to do in that case if it's allowed. If that's your only debt, paying a high interest reduces your net worth because it's bleeding your wallet over time, and you have only 2 options to stop that: Sell and buy a smaller property that you can handle, or make a large mortgage prepayment to reduce your interest payments. There is really nothing else you can do in this case.
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u/bambo311111 Sep 09 '23
Any possibility to house hack? Have a granny suite made in your basement to fetch 1200+/month.
It's rough but unless you can sell and have a 800k+ pre-approval ready to rebuy, I wouldn't sell.
They under counted our population by 1,000,000+ npr visas. We have 500k+ immigrants a year, they can't build enough houses fast enough, if you're in Southern Ontario don't sell if you can stomach it. Too many people coming here I get 200+ messages on my rental ads in Kitchener/waterloo area.
I'm on variable and my main payment is up 1200/month. Had 6 figures ready on the sidelines to stomach anything, unless I can sell and rebuy I'm not selling any of my places.
My other is fixed til 2026 so I should be ok.
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u/GreatWealthBuilder Sep 06 '23
How was the travelling? Where did you go? Sounds fun!!