How much of your mortgage approval did you use?

75%!

Didnt know about the 75 rule haha

0%. This mortgage bonanza will end in disaster and I don't want any part of it. My main focus is on how to best shield my investments from Canada's impending mortgage crises.

My investments are 20% invested in Canadian assets and I am planning on reducing that to 0%. However, a lot of other countries are also being very financially irresponsible so it is difficult to figure out where to invest - it is like trying to find a wife at a brothel.

Stupid analogy.

Apart from that are you using forex to acquire assets outside Canada

About 75% also but just sort of happened that way. Wasn't a number we shot for.

about 80%. didn't know about the 75% rule either, we would have definitely used 100% if we found a place we liked for that price.

Milkman16 wrote: ↑when you purchased your house, how much of your approval did you use? Advice has been given that you should not exceed 75% of what you are approved for!

Carebra wrote: ↑75%!

Didnt know about the 75 rule haha

Seems like an arbitrary number to me.

HumansOfToronto wrote: ↑0%. This mortgage bonanza will end in disaster and I don't want any part of it. My main focus is on how to best shield my investments from Canada's impending mortgage crises.

My investments are 20% invested in Canadian assets and I am planning on reducing that to 0%. However, a lot of other countries are also being very financially irresponsible so it is difficult to figure out where to invest - it is like trying to find a wife at a brothel.

Not sure if R/E will crash in Canada, given that our dollar is so cheap to buy. There are tons of foreign investors lining up to buy our over-priced real-estate.

As for your investments, your strategy will render you less than optimal result. It is always about buy & hold: buy low-cost index funds and hold on for dear life. My portfolio is 25% each of Bonds, CAD Equities, US Equities, and Int'l Equities. Right now, US Equities are expensive resulting in me pouring more money in on CAD Equities.

Once you have come up with an asset allocation, you stick to it if you want optimal results. Changing your allocation strategy mid-stream is the main reason why your average citizen does not even earn average results despite using the indexing strategy.

The question is funny. It's should not be the bank, telling you what you can/cannot afford. You should be doing your own budgeting to come up with a number that you can afford comfortably. The mortgage rate is at historic low. 5-year variable closed is at 2%. If the interest rate goes up by 1% (which is not much), the cost of borrowing goes up by 50%.

"His basic guideline: The monthly cost of your mortgage and property taxes, plus the monthly portion of your annual home insurance bill, should not eat up more than 25 to 30 per cent of your monthly net pay."

I don't recall being given a maximum amount. I recall telling the bank the most I was interested in borrowing and we worked starting from that number. I had no interest in going above $400k (ended up bying for $315k), although with both our salaries, I assume we could have been approved for as high as $700k.

So around 50% I guess.

I said the amount I wanted for approval, they said OK.

No idea how much they would have approved maximum... not sure why I should care.

That's a meaningless number I think. One has to be rational and determine what is it s/he or they are comfortable with. I did my numbers and used a lot less than what the bank had approved me for. I had a plan in place before purchase including contributions to RRSP/RESP and didn't want to skim on those. Its not a dream house by any means, has only two bathrooms, no dual vanity and walk in closets etc, but its in a quiet part of town and in a very good neighbourhood with good schools. We are very content and have never ever regretted our decision to stay within our means.

cashinstinct wrote: ↑I said the amount I wanted for approval, they said OK.

No idea how much they would have approved maximum... not sure why I should care.

I think usually you can get a mortgage of 4 or 5 times of annual income but people can totally get up to 6 x if the down payment is like more than 50% of the total value of the house.

We only used one of our income for mortgage pre approval and we only ended up using about 60% of it.

I ended up using 68%. I fell in love with a house and couldnt pass it up.

superping wrote: ↑The question is funny. It's should not be the bank, telling you what you can/cannot afford. You should be doing your own budgeting to come up with a number that you can afford comfortably. The mortgage rate is at historic low. 5-year variable closed is at 2%. If the interest rate goes up by 1% (which is not much), the cost of borrowing goes up by 50%.

"His basic guideline: The monthly cost of your mortgage and property taxes, plus the monthly portion of your annual home insurance bill, should not eat up more than 25 to 30 per cent of your monthly net pay."

Very good point.

Who is "his"

superping wrote: ↑The question is funny. It's should not be the bank, telling you what you can/cannot afford. You should be doing your own budgeting to come up with a number that you can afford comfortably. The mortgage rate is at historic low. 5-year variable closed is at 2%. If the interest rate goes up by 1% (which is not much), the cost of borrowing goes up by 50%.

"His basic guideline: The monthly cost of your mortgage and property taxes, plus the monthly portion of your annual home insurance bill, should not eat up more than 25 to 30 per cent of your monthly net pay."

I don't think this 25-30 is realistic. Of course everybody wants to have this scenario but with these numbers pretty much nobody can afford a decent place.

Lets say making 100k which means about $5900 per a month. 5800*0.30=$1770. $1770-$50 insurance-$100 property tax=$1620. That means about $350k mortgage. What can you get with that money?

Am I missing any point?

I don't think Vancouver prices are realistic... guidelines/ideas such as 25-30% of monthly net pay don't have to change to account for the prices in Vancouver.

I am at around 25% of monthly net pay for mortgage/property taxes/home insurance.

cashinstinct wrote: ↑I don't think Vancouver prices are realistic... guidelines/ideas such as 25-30% of monthly net pay don't have to change to account for the prices in Vancouver.

I am at around 25% of monthly net pay for mortgage/property taxes/home insurance.

Yeah totally agree with you but what I see is that it'll never change. At the best case scenario it'll be stable so if you gotta live here, you have no choice

0% apparently to qualify for a mortgage you need a job

Carebra wrote: ↑Very good point.

Who is "his"

Source:
http://www.theglobeandmail.com/globe-in ... le4104787/