I think Canadians also don't have mortgage interest tax deductions and together with your list makes the Canadian market less buoyant.
I think Canadians also don't have mortgage interest tax deductions and together with your list makes the Canadian market less buoyant.Sort of yes and sort of no. The lending rules before the bubble were:
-minimum 5% down payment, but you require loan default insurance if your down payment is less than 20%
-maximum mortgage is 30 years
In response to the housing crash of the US:
-maximum mortgage changed to 25 years
-minimum of 20% down payment before investment properties can get loan default insurance through the government
-maximum refinance is 90% instead of 95%
-the government will not insure homes over $1,000,000
.......
I hope it tanks, so an average house is about 50-100K like they were when my parents bought a home in the 70s and 80s. I also hope someone announces a way to convert base metals to gold, silver, and copper, so those markets tanks to reasonable values. I also hope the Fed just hyperinflates for like a day, we pay off our all our debts with worthless money, then deinflates the next day.
I'm shopping for a house and they are still over priced.
And current home owners should be happy about lowered homes prices because they can get re-assessed and pay lower property taxes.
I hope it tanks, so an average house is about 50-100K like they were when my parents bought a home in the 70s and 80s. I also hope someone announces a way to convert base metals to gold, silver, and copper, so those markets tanks to reasonable values. I also hope the Fed just hyperinflates for like a day, we pay off our all our debts with worthless money, then deinflates the next day.
I fell over laughing at the part stated in bold.
You're kidding...right?
It doesn't work that way, you know...?
Yeah sure, it should... But it doesn't.
Once your city assesses your home, it's written in stone.
Let the tricks begin...
Like yeah sure, technically homes should see lower prop taxes due to falling sale values, but the city will then simply raises the rate to cover that loss.
In the end? Zero difference to you.
Property taxing is a one way street. Ever increasing, never decreasing.
Any home owner knows that only too well.
...
Yep! The city can do whatever they want to assure income from property taxing will never actually decrease one dollar. And the city does just that.
But every home owner already knows all this, and the tricks, of property taxing by the city.
I fell over laughing at the part stated in bold.
You're kidding...right?
It doesn't work that way, you know...?
Yeah sure, it should... But it doesn't.
Once your city assesses your home, it's written in stone.
Let the tricks begin...
Like yeah sure, technically homes should see lower prop taxes due to falling sale values, but the city will then simply raises the rate to cover that loss.
In the end? Zero difference to you.
Property taxing is a one way street. Ever increasing, never decreasing.
Any home owner knows that only too well.
On a one by one personal level, you could protest your prop taxes with the city by using comps.
But then again, the city expands their comps used to value your home to include areas where sale prices are still above average when compared to your area.
Not fair? Sure! Illegal? No....
So again, you're screwed.
Yep! The city can do whatever they want to assure income from property taxing will never actually decrease one dollar. And the city does just that.
But every home owner already knows all this, and the tricks, of property taxing by the city.
Sort of yes and sort of no. The lending rules before the bubble were:
-minimum 5% down payment, but you require loan default insurance if your down payment is less than 20%
-maximum mortgage is 30 years
In response to the housing crash of the US:
-maximum mortgage changed to 25 years
-minimum of 20% down payment before investment properties can get loan default insurance through the government
-maximum refinance is 90% instead of 95%
-the government will not insure homes over $1,000,000
This effectively deflates the bubble without crashing. 25 years instead of 30 years means you can't borrow as much money, so housing prices should go down IMO. My coworker is a real estate guy and he thinks it will go up by 10% for some reasaon; I didn't think his explanation made any sense. Boosting the down payment up to 20% for investments should deter some investors, and that too would bring the prices down more IMO. I know a lot of people were upset about these rule changes, but I think it beat the alternative - a hard market crash.
This is true. Can you imagine how incredibly unstable the government would be if taxes wildly fluctuated with the market? One year everything is ok, real estate prices drop 20%, suddenly the whole city is completely fucked and cancels all road construction for the next 5 years. The taxes on the property were part of the calculations you did before buying the house, so they know you can keep paying that much. Market drops 20%? You still owe us $3,000 taxes and it doesn't matter what percentage of your land value that works out to.
I did a shit load of Excel spreadsheets a couple months ago when before jumping into a mortgage. Some of the things really surprised me:
when making the minimum payments for the same $100,000 property:
-Cost of borrowing (interest on the loan) and length of the loan are extremely linear. Taking 10% longer to pay off 100k will cost you 10% more in borrowing costs, the R^2 of the graph was 0.998
-Cost of borrowing and interest rate are extremely linear. The interest on a 4% loan is twice as much as the interest on a 2% loan. R^2 is 0.9991 for a 25 year loan.
-Interest rate has a larger effect on loans with longer terms. For every 5 years, a 1% interest increase is equivalent to a 1.28% jump. It's hard to put into words what I'm trying to explain. Let's say you have a loan at 1% interest for 10 years. If the interest goes up by 1%, that 10 year loan now costs 2% for 10 years. If you had a loan for 15 years instead of 10 years, going from 1% to 2% interest over 15 years is the same cost increase as jumping from 1% to 2.28% for 10 years. I didn't put an R^2 on this graph, but it's very linear and the trend line passes through all of the data points. The formula I wrote at the bottom of the page is:
relative cost of borrowing = (interest rate) * (mortgage years / 5) * 1.28
When making fixed payments (paying $900/mo regardless of what the minimum payment is):
-Cost of borrowing increases exponentially with time. Using my own information and a very pessemistic interest rate of 5%, every $1 worth of property above $108,000 will cost me $2.08 and it gets worse as the value goes up. This means it makes a lot of sense to buy properties in a series of small steps. A series of short loans will have a linear cost of borrowing. You start at 100k, pay it off, then move up to 200k. If I start at a 200k property, the cost of borrowing is just horrendous.
If you have some time to kill, put your own numbers into here and start plotting data points:
http://www.ratesupermarket.ca/mortgage/rate_calculator/
Correct. Your mortgage is not a tax deduction, nor are rent payments. There's a way to "borrow" from your not-taxed retirement fund and use that to pay for a house, but it only applies to your first house. The money needs to be paid back into the retirement fund within a certain amount of time. If you don't pay it back in time, you need to pay income tax on that money.I think Canadians also don't have mortgage interest tax deductions and together with your list makes the Canadian market less buoyant.
lolololz. My dad said the interest on his mortgage (I think late 70s) was something like 8% and that was "a killer deal." Let's hope we never see that kind of rampant inflation again. You had 10k in the bank? Well now it's worth a hell of a lot less! Yay inflation tax!Oh yes those were the days. $100k for the house @ 17%
Minimum down payment in Canada is 5%. You would only need $25,000 in cash. Ha, only. Don't most people have a giant pile of cash sitting in the bank? I probably have that much in the trunk of one of my many BMWs.With houses pushing past $500k average even outside Toronto, not many are going to half $100k saved up
I sort of did and sort of didn't factor it in. One could say that the effective interest you pay is the difference between the interest on the loan and the inflation rate of the currency used to pay the loan. Example: 5% loan - 3% currency inflation = 2% cost of borrowing, approximately.But what rate did you use to discount the value of future dollars into today's dollars?
I fell over laughing at the part stated in bold.
You're kidding...right?
It doesn't work that way, you know...?
Yeah sure, it should... But it doesn't.
Once your city assesses your home, it's written in stone.
Let the tricks begin...
Like yeah sure, technically homes should see lower prop taxes due to falling sale values, but the city will then simply raises the rate to cover that loss.
In the end? Zero difference to you.
Property taxing is a one way street. Ever increasing, never decreasing.
Any home owner knows that only too well.
On a one by one personal level, you could protest your prop taxes with the city by using comps.
But then again, the city expands their comps used to value your home to include areas where sale prices are still above average when compared to your area.
Not fair? Sure! Illegal? No....
So again, you're screwed.
Yep! The city can do whatever they want to assure income from property taxing will never actually decrease one dollar. And the city does just that.
But every home owner already knows all this, and the tricks, of property taxing by the city.
I'm shopping for a house and they are still over priced.
And current home owners should be happy about lowered homes prices because they can get re-assessed and pay lower property taxes.