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> You also generally can’t borrow 5x your income You can easily access 3X levered ETFs. Also, while you start out at 5X leverage, you pay down the principal ov
by dcolkitt 6y ago
> You also generally can’t borrow 5x your income
You can easily access 3X levered ETFs. Also, while you start out at 5X leverage, you pay down the principal over time. Over the lifetime of a 30-year mortgage, your average leverage is closer to 2X.
- gomox 6y ago3x the collateral, not 3x your yearly income.
- davio 6y agoMortgage leverage is more like 20x for first time buyers VA loans have even higher leverage
- anthony_r 6y agoMortgages are so f* insane when you do the basic maths, such as 1/downpayment to get the leverage. If you just presented the numbers differently nobody would have ever signed up for one except people like Victor Niederhoffer. And on top of that most of the underwriting is on central government balance sheet via frankenstein constructs like fnma. Sheesh..
- izend 6y agoAlso in Canada the capital gains on your "primary residency" is tax free. I know "lucky" Vancouver couples who bought the right property at the right time and it is equivalent to winning the lottery. i.e. $600K capital gains in just 2 years. The inequality created by having huge winners in "hot housing markets" acquiring enormous wealth vs others in flat or down housing market receiving absolutely nothing (not even mortgage interest deduction which isn't available in Canada) is insanity in my mind.