Re:Danes Get 20-Year 0% Mortgages
by BunsanSpace on Tuesday January 05, 2021 @04:17PM
(#25651200)
Thank god Canada created the CMHC which would insure loans and allow you a down payment as low as 5% for first time buyers.
ironically because the loans where insured they offered lower interest rates on these loans, which meant they costed almost the same as 20% uninsured loans (you paid the insurance premium on-top of your mortgage payment).
even if you have a 20% down it made more sense to put 5% down and put the rest into the index funds or a HISA.
Re:Danes Get 20-Year 0% Mortgages
by tathougies on Tuesday January 05, 2021 @04:52PM
(#25651656)
In the USA, first-time homebuyers can put 3.5% down with an FHA loan, but they have to pay insurance until they reach 20% equity.
Re:Danes Get 20-Year 0% Mortgages
by sneeze-slayer on Tuesday January 05, 2021 @06:43PM
(#25652902)
Anyone can do that, not just first time purchasers.
This seemed to completely miss the point of a down-payment, but apparently banks were willing to go with it. They even offered the dual loans as a single product for convenience.
If you work the numbers out it can theoretically save money over the long term vs. renting long enough to save the 20%, especially if it means you can put more money into risky stocks with high returns, but it also increases your risk of financial disaster if the bubble for some reason ever stops inflating, but that never happens as we all know.
Personally I though it was too sketchy and went for a more traditional loan, but I know several people who took loans like that.