52% of Canadians on the brink of not being able to pay their bills anymore
- Thread starter stinkynuts
- Start date
on a $1M house, this is what happens:
Your monthly payment is $7,000!!
And if you somehow manage to do this for three years:
You pay nearly $200,000 in interest, and about $55,000 in principal, leaving $950,000 left to pay.
And what can you really get for $1M in Toronto nowadays? Maybe a bungalow, or a nice condo.
Absolutely fucking ridiculous.
| Payment amount | $6,860.80 / Monthly Includes TD Credit Protection > | Plus Create new option to compare > |
|---|---|---|
| Mortgage amount (Actual mortgage amount may change based on TD down payment requirements) | ||
| Interest rate | 3 Year Fixed Rate Mortgage 6.36% | |
| Amortization period | 25 years | |
| Payment frequency | Monthly | |
| View amortization and term schedule | ||
| Balance after 3 years term | ||
| Total payments over term | $238,089.60 | |
| - Interest paid | $183,501.56 | |
| = Principal paid | $54,588.04 | |
| Balance at end of term | $945,411.96 |
If people took advantage of the low rates and over extended themselves, they are in trouble. I have been pretty reserved in what I spend, thanks to a divorce. With the cost of everything lately, what has taken an impact is this hobby. Not spending as much just to make sure I have money left over for the necessities.
Forget houses.
yes, you will pay enormous amounts of interest over the life of it. Yes, the vast majority of Canadians will be house poor as a result and on the brink. A stiff wind….On the other hand,they are typically an asset that appreciates in value. And for most Canadians, their “future” when they retire. Not all debt, is bad debt.
If you really want a cold splash of water. Look at your vehicles. Forget the fact they are depreciating assets with short shelf lives. Forget the fact that if you write one off, you will have a large amount of negative equity.
Even if you are “prime”, and can get the best financing terms. What you will pay in interest over the life….
If you are below prime. Which is one heck of a lot of you. Your rates will be astronomical. Young kids today. You or your children? I’ve seen as high as 35% and that was 4 years ago. Paying far more in interest, than the sticker price paid when you drove it off the lot.
yes, you will pay enormous amounts of interest over the life of it. Yes, the vast majority of Canadians will be house poor as a result and on the brink. A stiff wind….On the other hand,they are typically an asset that appreciates in value. And for most Canadians, their “future” when they retire. Not all debt, is bad debt.
If you really want a cold splash of water. Look at your vehicles. Forget the fact they are depreciating assets with short shelf lives. Forget the fact that if you write one off, you will have a large amount of negative equity.
Even if you are “prime”, and can get the best financing terms. What you will pay in interest over the life….
If you are below prime. Which is one heck of a lot of you. Your rates will be astronomical. Young kids today. You or your children? I’ve seen as high as 35% and that was 4 years ago. Paying far more in interest, than the sticker price paid when you drove it off the lot.
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Mortgages are set up to pay interest on the loan first then the principle. Atleast that was what I was told by the bank.
It’s not a case of being “set up” that way. It’s just how paying interest on a loan work. If you lend me $100 for 5 years. We agree the interest ( simple not compounded) will be 10%. And the monthly payment amount is $12 ( just making up for illustration)
At the end of year 1.
Interest paid $10. Payment against the loan $2Balance owing 98
Year 2
you’re paying 10% on $98. Payment still $12.
So interest $9.8, amount against the loan 2.20….
Keep repeating until such time that you reduce the loan enough that more of the $12 goes against the loan ( principal) and the interest amount gets smaller and smaller. Sort of like a teeter totter.
If you say so…
If you were to lend me. $100.
How fast would you want it back…how much risk are you willing to take I’ll pay it back. And if I could pay it back in “1” year. Why on gods green earth am I even asking for that loan.
If you were to lend me. $100.
How fast would you want it back…how much risk are you willing to take I’ll pay it back. And if I could pay it back in “1” year. Why on gods green earth am I even asking for that loan.
100%, even worse are the idiots that fall for the “How much can you pay each month” trap when buying a car. That extra $20-$50 month adds up to serious cash at the end of a 5 or 6 year loan.
I need to change vehicles fairly regularly as I drive between 60, 000and 70,000 km a year so I generally buy something a year or two old with about 30,000km on it and save about 1/3 and always pay cash. I know you can sometimes get a better deal if you finance and pay that off asap but being self employed that’s a pain in the ass.
I do more than the average driver too.
Used to buy new, there are legit trade offs. I’m prime so don’t need to worry about the higher rates that come with higher risk. Only interested in used now and like you 1-3 years 30-40k
With used though, lenders charge higher rates, and many, only offer shorter amortization periods. All depend on how old the vehicle is. The older it is, the higher the rates and shorter the term. From the lenders side of thing it makes perfect sense. If you write it off, or walk away. They are stuck with an asset that’s not worth the loan value…
anyone here can google any car loan calculator. Plug in say 12-22 percent and 5 years…. Depending on your credit rating and the rate you can get. not hard at all to pay more in interest, then you pay for the vehicle.
Used to buy new, there are legit trade offs. I’m prime so don’t need to worry about the higher rates that come with higher risk. Only interested in used now and like you 1-3 years 30-40k
With used though, lenders charge higher rates, and many, only offer shorter amortization periods. All depend on how old the vehicle is. The older it is, the higher the rates and shorter the term. From the lenders side of thing it makes perfect sense. If you write it off, or walk away. They are stuck with an asset that’s not worth the loan value…
anyone here can google any car loan calculator. Plug in say 12-22 percent and 5 years…. Depending on your credit rating and the rate you can get. not hard at all to pay more in interest, then you pay for the vehicle.
I will never finance a car. Always buy outright and never new.
Always different ways to look at the thing. Years ago, I might have talked to someone about using a secured credit line. Far lower rates. Downside is it takes discipline to make the “same” payments.
Cash.
Does virtually nothing to strengthen or improve credit ratings. For some, or many that’s s non starter. For people that might be looking to rent now or in coming years. It’s going to be a huge issue.
The same cash, you to purchase a used vehicle might be far better off used as a down payment shaving years off your amortization for the house. Or used to “fix” a roof, put s kid through college, etc and so on.
vehicles.
because they are depreciating assets, and the rates for them are/can substantial. Check the fine print…how much interest paid over X years, vs the sticker price.
Houses.
I don’t know how people do it these days. Long before prices really took off, the typical average Canadian couldn’t find two nickels to save. These days. A stiff breeze.
700 sq ft 1 bedroom for over a million. Didn't realize condo's were that expensive. Where is this? Bloor Yorkville?
He owns his own business/self employed. Could be a real estate agent…
Lenders are also shall we say a little more stingy when it comes to self employed. Need different insurance, proof of income is harder, credit checks a little more strident and rates are usually higher. Vehicles get beat up, have shorter shelf lives, aren’t as attractive when trying to sell.
Usually around $11,000. it sounds like a lot of miles but it’s mostly hwy and in Western Canada so not nearly as stressful as doing that many KM around the GTA.
not even close to being useful right now, never say never but a Tesla is still only good if 75% of your driving is urban. I do 800 to 1000 km a day fairly regularly in the winter in Western Canada. I’m not going to stop and charge 4 times a day. Not the many chargers when you get off Hwy 1 or hwy 16 and I’ve seen a ton of the ones that do exist out of order.
All my opinion but it just would not even be A consideration for me.
