englishman
Master Don Juan
Hi so-suavers, I have a financial dilema... maybe you can throw down your opinions and I'll maybe get some insight into what I should do for the best.
I live in vancouver Canada, the house prices here didn't bomb like in the US and some other places, it is however the most over priced city in N. America at the moment though, and you have to have a doctors income to buy a place here... theres a good chance its way over priced and a price correction is on the way? I read its the #3 most expensive city on the planet.
I bought a house here 3 years ago. I rent out most of it and live in part of it. The renters pay approx two thirds of the expenses (mortgage, taxes etc). I end up paying for the part of the house I live in about what it would cost me to rent if I was a tenant. So far so good I think.
When I bought the place 3 years back, I'd been travelling for 6 months of each of the 2 years previous. These were the 2 years that the mortgage company wanted to look at in order to decide wether to lend to me or not. My credit was medium.
I didnt actually have any of my own money to put down, bit I did have an apartment that I sold for 30 grand profit.
Because I wasnt the greatest proposition to the lenders and because here in Canada its the rule. If you have less that 20% down you have to insure the mortgage with a government aproved lender.
The premium you pay depends on how much you have down, in my case 5% (due to manipulating some figures) so the premium was high, but the lender is guaranteed their money if I default and that in turn makes me a safer bet and therefore I was offered a much better interest rate, which kind of takes care of the premium IF you have the mortgage long term (if you sell you forfeit the premium, which was about 18k)
So I ended up selling the apartment, my sister lent me 20 thousand, and the previous owner of the house carried a 2nd mortgage of 50 thousand at 12% which I pay interest only on ($500 a month)
I knew it would be a stretch but I thought I can do it. Also Im in the renovation business so I can add value to the house and maintain it myself.
Three days after I got the mortgage my youngest brother took his own life over in the U.K. besides throwing my head into a huge twister, I had to go to the UK at a time when I was really having to make this deal work, getting the place rented out in order to make the numbers work.
Houses are f*ing expensive here and when all the dust had settled I ended up owing
Visa card $20K ....10.5%
sister 20k 7%
2nd mortgage 50k ...12% interest only
Misc taxes and robbing peter to pay paul 10k ...various interest and penalties
total 100k + interest and penalties
BUT the renters still pay 2/3 of the costs, and I pay the other third, and Ive got to live somewhere.
Now the interest on the visa, sister and 2nd mortgage is quite a lot each month and thats before I pay anything off the principal.
I figure if I paid a thousand bucks a month I'd probably be paying it off for 15 years, and with the interest I paid, I'd probably pay around $60 thousand dollars more in interest. (im guessing that. It could actually be a lot more)
The good part is that the house has gone up in value about 200 thousand since I bought it.
If I sold now I could pay everybody off, and still likely have 100k left over.
In reality though I put the 30 K from the apartment I sold into the deal and I've probably put 80 k into it in renovations and sweat equity. So really Id just get my 30K from the apartment back + paid for my sweat equity.
Im not sure what to do. I could sell, have peace of mind and a 100k in my pocket. Then go and rent again and lose any gain the place might make, + the renters paying down the mortgage. BUT have the 100k instead of the huge pain in the asz debt of 100k. BUT pay rent of say 15k a year instead of paying a mortgage down.
I could hold it, struggle to pay the debt load that Ive got. Not have to pay rent and have the revenue from the renters. BUT if the house prices tank, be left with a lemon if say It became a real renters market and I couldnt rent to cover my payments.
What to do? in the end I think there's no clear cut mathematical answer... it;s kind of as broad as it is long. More of a personal lifestyle decision? do you want the freedom and a 100k or the long term, lot of pressure but maybe come up trumps in your old age??
I live in vancouver Canada, the house prices here didn't bomb like in the US and some other places, it is however the most over priced city in N. America at the moment though, and you have to have a doctors income to buy a place here... theres a good chance its way over priced and a price correction is on the way? I read its the #3 most expensive city on the planet.
I bought a house here 3 years ago. I rent out most of it and live in part of it. The renters pay approx two thirds of the expenses (mortgage, taxes etc). I end up paying for the part of the house I live in about what it would cost me to rent if I was a tenant. So far so good I think.
When I bought the place 3 years back, I'd been travelling for 6 months of each of the 2 years previous. These were the 2 years that the mortgage company wanted to look at in order to decide wether to lend to me or not. My credit was medium.
I didnt actually have any of my own money to put down, bit I did have an apartment that I sold for 30 grand profit.
Because I wasnt the greatest proposition to the lenders and because here in Canada its the rule. If you have less that 20% down you have to insure the mortgage with a government aproved lender.
The premium you pay depends on how much you have down, in my case 5% (due to manipulating some figures) so the premium was high, but the lender is guaranteed their money if I default and that in turn makes me a safer bet and therefore I was offered a much better interest rate, which kind of takes care of the premium IF you have the mortgage long term (if you sell you forfeit the premium, which was about 18k)
So I ended up selling the apartment, my sister lent me 20 thousand, and the previous owner of the house carried a 2nd mortgage of 50 thousand at 12% which I pay interest only on ($500 a month)
I knew it would be a stretch but I thought I can do it. Also Im in the renovation business so I can add value to the house and maintain it myself.
Three days after I got the mortgage my youngest brother took his own life over in the U.K. besides throwing my head into a huge twister, I had to go to the UK at a time when I was really having to make this deal work, getting the place rented out in order to make the numbers work.
Houses are f*ing expensive here and when all the dust had settled I ended up owing
Visa card $20K ....10.5%
sister 20k 7%
2nd mortgage 50k ...12% interest only
Misc taxes and robbing peter to pay paul 10k ...various interest and penalties
total 100k + interest and penalties
BUT the renters still pay 2/3 of the costs, and I pay the other third, and Ive got to live somewhere.
Now the interest on the visa, sister and 2nd mortgage is quite a lot each month and thats before I pay anything off the principal.
I figure if I paid a thousand bucks a month I'd probably be paying it off for 15 years, and with the interest I paid, I'd probably pay around $60 thousand dollars more in interest. (im guessing that. It could actually be a lot more)
The good part is that the house has gone up in value about 200 thousand since I bought it.
If I sold now I could pay everybody off, and still likely have 100k left over.
In reality though I put the 30 K from the apartment I sold into the deal and I've probably put 80 k into it in renovations and sweat equity. So really Id just get my 30K from the apartment back + paid for my sweat equity.
Im not sure what to do. I could sell, have peace of mind and a 100k in my pocket. Then go and rent again and lose any gain the place might make, + the renters paying down the mortgage. BUT have the 100k instead of the huge pain in the asz debt of 100k. BUT pay rent of say 15k a year instead of paying a mortgage down.
I could hold it, struggle to pay the debt load that Ive got. Not have to pay rent and have the revenue from the renters. BUT if the house prices tank, be left with a lemon if say It became a real renters market and I couldnt rent to cover my payments.
What to do? in the end I think there's no clear cut mathematical answer... it;s kind of as broad as it is long. More of a personal lifestyle decision? do you want the freedom and a 100k or the long term, lot of pressure but maybe come up trumps in your old age??
