Million Dollar Mortgages

[Rose11]

I was surfing Realtor to see houses I may want to buy one day. Seeing price tags of around 1.5M. Assuming a couple bring 500k to the table, which is a decent down payment and borrowed a million bucks (yikes), the monthly payment comes out to $6500. Who's paying 6500 a month in mortgage??? That's without other expenses. I wasn't looking in rich areas even where you'd expect wealthy people to put a giant sum as down payment (well over 20%).

How does the math work out ?

 

[Gstep]

A million dollars used to mean you were rich in the 80's. It still meant something in the 90's too. But now? It's just a down payment on a house in Toronto !!!

So annoying how people treat housing like an "investment" and not simply a place to live in. At the rate thing are going, it's going to be considered "generational wealth" if you simply own your own house in the GTA.

 

[dvous11]

A million dollar mortgage is actually very common.
It’s important to understand how we arrived here, as young as possible.
If you can mentor the young generation about this stuff they can aim their careers towards higher incomes. This will be the only way to live well moving forward.

 

[Rose11]

A million dollar mortgage is actually very common.

Lol is this a joke? Even with high incomes, it is barely affordable. Because there is also property tax and insurance on top of the 6500/m mortgage.

 

[curr3n_c1000]

Lol is this a joke? Even with high incomes, it is barely affordable. Because there is also property tax and insurance on top of the 6500/m mortgage.

Some of these boomers and Gen Xers are so out of touch.

 

[Rose11]

Lol so no one understands the math..... Because the numbers do work out. That's what people are paying... Who are these people?

 

[curr3n_c1000]

Lol so no one understands the math..... Because the numbers do work out. That's what people are paying... Who are these people?

You are assuming everyone is doing it the old fashion and honest way.

some people are selling one house and upgrade, some people are renting the basement, some people don’t even own the home, some leverage their small business, some bring money from overseas.

Mix this in with a few shady real estate agents, lawyers and lenders and you have the housing market.

to offset this, younger people are buying outside of the gta, but even that unaffordable now.

 

[dvous11]

Lol is this a joke? Even with high incomes, it is barely affordable. Because there is also property tax and insurance on top of the 6500/m mortgage.

Barely affordable to you is different that what others may experience.
Consider a few things.
For many years the interest rate on borrowing was quite low, so people perceive paying $200K over asking price as no big deal, even though it is now when they do their 5yr renew and their monthly payments double.
Often now, especially certain cultures, people will pool their money to buy a property, fill it full of two or three families, or renters, use the equity after a few years to purchase another, and become skilled at managing debt.
Generational wealth is being passed down after offspring have achieved the ability to earn well beyond the "average" and so a combined household income over $20k/mth is not uncommon.
I think those who say things like "out of touch", or "unaffordable" simply exist in a different economic category of society.
Not saying that's good or bad, just the reality of different existences.
I know people who will rent their entire lives because they didn't have parents who helped them get established/ahead, and who work T4/pension jobs with average ambitions, meaning they will receive their small dispersement of highly taxed income every 2 weeks for life and no "side hustle" they can use for supplement income to get ahead.
I also know people who are highly ambitious and intelligent, regardless of academic education accomplishment, who are 30yrs old, constantly buying properties, owning/operating businesses, and just understand how to constantly leverage equity/debt.
Purchasing housing is definitely more difficult nowadays, but it's doable depending on the strategy you create, and the SACRIFICES you're willing to make.
That's the one big factor people can't seem to get their head around is the sacrifice and discipline portion of the equation.

 

[Carvher]

Everybody needs to keep in mind that the higher rates have just begun to move through the system. A lot of mortgages are still to come up over the next 3 years and we will see how things are then.
Also sellers still think its 2021 and are so far able to hang on because so few homes are up for sale.

 

[farquhar]

For sale: 426 CANTERBURY CRES, Oakville, Ontario L6J5K7 - W5956165 | REALTOR.ca

$1.786 Million will get you a 60*100 lot in SouthEast Oakville.

A bungalow used to sit on this lot; it was bought and torn down.

426 Canterbury Crescent - Google Maps

There are permits in place to construct a 4,500 Square Foot house with Pool; you build the house.

What about just buying the lot and parking an RV there? There's probably a By-Law that prohibits that.

 

[RichardG2020]

I was surfing Realtor to see houses I may want to buy one day. Seeing price tags of around 1.5M. Assuming a couple bring 500k to the table, which is a decent down payment and borrowed a million bucks (yikes), the monthly payment comes out to $6500. Who's paying 6500 a month in mortgage??? That's without other expenses. I wasn't looking in rich areas even where you'd expect wealthy people to put a giant sum as down payment (well over 20%).

How does the math work out ?

Growing up in Mississauga, the mansions were located in the Mississauga Road

At the time, you were rich if you lived there.

However, ‘average families’ started buying properties in this area? How? Many were South Asian, and you had multiple generations, and siblings sharing a mortgage.

Today, I know many of these million dollar mortgages have more than 2 incomes paying them.

For example, one of my staffers has 8 people living in their 2400 square foot house with a finished basement apartment. There are 6 adults paying the mortgage.

 

[Protege]

I was surfing Realtor to see houses I may want to buy one day. Seeing price tags of around 1.5M. Assuming a couple bring 500k to the table, which is a decent down payment and borrowed a million bucks (yikes), the monthly payment comes out to $6500. Who's paying 6500 a month in mortgage??? That's without other expenses. I wasn't looking in rich areas even where you'd expect wealthy people to put a giant sum as down payment (well over 20%).

How does the math work out ?

The culture here in the GTA (I'm assuming you're talking about the GTA), is to either a) rent out a portion of the house and/or b) live with other family members that have jobs that can contribute to paying the mortgage (you obviously have to share the equity). Renting out a basement is now around $2k per month starting? 1bed condos go for at least $2100-2200/mth. So a 2bed or 3bed basement with kitchen has to go for at least $2500. So, adjust your monthly mortgage accordingly. You may be able to get a good deal on a $1.5m house as the recession gets worse over the next 12-18 months.

 

[Rose11]

People saying the way the homes are being afforded is by having part of the property tenanted. That works for mansions or big houses. Those go for $3M now when they used to go for 1M back in the day.

I was talking about small 3 bedroom homes or bungalos where one can absolutely not have any tenants. Today, the prices of these small properties is 1.2M. That's a monthly mortgage of $6500+.

 

[dvous11]

People saying the way the homes are being afforded is by having part of the property tenanted. That works for mansions or big houses. Those go for $3M now when they used to go for 1M back in the day.

I was talking about small 3 bedroom homes or bungalows where one can absolutely not have any tenants. Today, the prices of these small properties is 1.2M. That's a monthly mortgage of $6500+.

The toronto neighbourhood in which I was raised are these 3 bedroom bungalows.
They have separate side entrances to the basements.
People are buying the house for $1M, spending whatever $ to separate the units.
Often, two diff tenants in the basements...combined income of $2500-ish.
Then, if they wish to live there in the main floor, they often rent out bedrooms for $1000/mth.
So, at least half of the mortgage payment is being covered.
You see....it's doable.
Why do you think 3 bedroom bungalows can have no tenants?
It's being done everywhere.
Now, the reality is most of them are indian culture where they come from a place where living in crowded spaces, sharing a bathroom might be more normal.
Again....sacrifice/discipline may be the only way to accomplish ownership.

 

[curr3n_c1000]

People saying the way the homes are being afforded is by having part of the property tenanted. That works for mansions or big houses. Those go for $3M now when they used to go for 1M back in the day.

I was talking about small 3 bedroom homes or bungalos where one can absolutely not have any tenants. Today, the prices of these small properties is 1.2M. That's a monthly mortgage of $6500+.

Some of these places are still rented. You will see developers renovate these homes, then rent out. Or they sell to a Holding company that then rents it out.

If you can hold a condo as a rental property, why not a small 3 bedroom homes or bungalo?

 

[Rose11]

If you can hold a condo as a rental property, why not a small 3 bedroom homes or bungalo?

The rent on these homes is $3400 to $3900 and the mortgage is $6700 without property tax. No investor is buying these homes to rent out in order to lose $3000+ a month.

 

[Rose11]

The toronto neighbourhood in which I was raised are these 3 bedroom bungalows.
They have separate side entrances to the basements.
People are buying the house for $1M, spending whatever $ to separate the units.
Often, two diff tenants in the basements...combined income of $2500-ish.
Then, if they wish to live there in the main floor, they often rent out bedrooms for $1000/mth.
So, at least half of the mortgage payment is being covered.
You see....it's doable.
Why do you think 3 bedroom bungalows can have no tenants?
It's being done everywhere.
Now, the reality is most of them are indian culture where they come from a place where living in crowded spaces, sharing a bathroom might be more normal.
Again....sacrifice/discipline may be the only way to accomplish ownership.

This is just BS and not what happens in real life in Canada. I don't know any south Asian Canadians that live like that, it's probably illegal. Works in India, not here.

Btw, Mississauga homes are only 1.3m.

How do you explain Richmond Hill then? There, the average price is $1.8M. Are Italians also stuffing every basement and bungalow bedroom with 3 humans each so they can pay the mortgage on the 1.8M home? What about Markham (1.5M), Asians doing the same thing? Oakville (1.4M), White Canadians also cramping in basements? I don't think so.

 

[farquhar]

This is just BS and not what happens in real life in Canada. I don't know any south Asian Canadians that live like that, it's probably illegal. Works in India, not here.

Btw, Mississauga homes are only 1.3m.

How do you explain Richmond Hill then? There, the average price is $1.8M. Are Italians also stuffing every basement and bungalow bedroom with 3 humans each so they can pay the mortgage on the 1.8M home? What about Markham (1.5M), Asians doing the same thing? Oakville (1.4M), White Canadians also cramping in basements? I don't think so.

Plenty of Chinese in SouthEast Oakville these days. Those guys pay all cash that is brought in from the Mainland; the husbands go back and forth and work, while the wife stays at home with the child (usually one son). I would say my Mom's neighborhood is about half Chinese now.

 

[curr3n_c1000]

The rent on these homes is $3400 to $3900 and the mortgage is $6700 without property tax. No investor is buying these homes to rent out in order to lose $3000+ a month.

Why would an investment company take a huge mortgage when they have access capital?

 

[dvous11]

This is just BS and not what happens in real life in Canada. I don't know any south Asian Canadians that live like that, it's probably illegal. Works in India, not here.

Btw, Mississauga homes are only 1.3m.

How do you explain Richmond Hill then? There, the average price is $1.8M. Are Italians also stuffing every basement and bungalow bedroom with 3 humans each so they can pay the mortgage on the 1.8M home? What about Markham (1.5M), Asians doing the same thing? Oakville (1.4M), White Canadians also cramping in basements? I don't think so.

It’s not BS, it’s happening on my old street exactly as I’m describing.
On my current street is a 5 bedroom 2 storey house being rented to 8 Indian students for $1000/mth each. Landlord raking in $8k/mth and his mortgage is more than covered.
And yes rooming houses and multiple rentals in most zones are def illegal but that doesn’t stop them from doing it.