5 ms·

I'm in the top 30% income bracket in the country I live in. I would need to spend 2/3 of my monthly income for 30 years on a mortgage to buy a 3-room flat (for

I'm in the top 30% income bracket in the country I live in. I would need to spend 2/3 of my monthly income for 30 years on a mortgage to buy a 3-room flat (for a small family) in the city I live in. But first I need another ~3 years to save enough for the down payment. It feels monumental and I think I will rather move to the countryside (grew up there anyway) and try to find another job there. I can build a big house there for half the price of a 3 room flat here. I honestly don't know that to tell the lower 50% of the income bracket. They have no chance in this game. They will perpetually have to pay rent, distributing 1/3 of their income to someone richer than themselves.

hourislate 5y ago
Housing in Toronto goes up 2k a week. The average price is over 1 million. Unless you inherit Grandmas house, you aren't buying shit on your salary in Toronto. The crisis is now spilling over to all of Ontario. I don't even know what you have to bring home after taxes to save up for a down payment. Most houses are well over 1 million. The house I bought in 2005 for $440k could fetch around 1.2 million today with multiple bids and I guarantee that it will be torn down so a new home can be built on the lot. A new home in my area goes for 2.5 plus million and they can't build them fast enough. https://www.blogto.com/real-estate-toronto/2021/05/toronto-less-affordable-housing-new-york-la/ https://www.blogto.com/real-estate-toronto/2021/05/toronto-l...
- throw0101a 5y ago
  > and they can't build them fast enough. Which has generally been the problem: lack of supply given current population growth.
- hellbannedguy 5y ago
  You need to stop that Chinese funny money. Along with the USA. (In the USA any foreigner can pick up a phone, or send an email, and buy our real estate. I can't think of any other country that all allows such easy buys. Now---they arn't suspose to live in them, but it always seem like they do.)
jjav 5y ago
> I would need to spend 2/3 of my monthly income for 30 years But it is not 2/3 of your income for the entire 30 years. Even if it is 2/3rds of your income right now, the mortgage payment only ever goes down due to the three factors of inflation, refinances and (hopefully) raises you get over the decades. Compare to rent which only ever goes up.
- HPsquared 5y ago
  Interest rates can rise, which would increase the mortgage. Also, buyer's income could fall at some point in the next 30 years.
  - danuker 5y ago
    Do banks actually take any interest rate risk? In Romania, there are a few offering a fixed interest rate.
    - vishnugupta 5y ago
      In India the fixed rate is about 2-3% above the prevailing rate (I.e., 12-13% as opposed to 10%) so they kind of pass in that risk to the borrower. Also here, “fixed” means that the rate is subject to change at fixed intervals as opposed to whenever the central bank changes the prevailing interest rate.
  - alert0 5y ago
    The majority of mortgages are 30 year fixed. The rates don't change and you would be insane to not get a fixed rate mortgage right now with rates at ~3%.
    - nmca 5y ago
      Where are you getting a 30yr fix from? London, 15yr fixes like 4.5% or something equally silly, 10yr also expensive, 5r common. 30, unheard of for retail mortgage?
isolli 5y ago
Small nitpick: with a mortgage, you pay rent (interest) to the bank for the money you borrowed. However, the interest you pay to the bank is usually less than the equivalent rent (the principal you pay back goes into your pocket by decreasing your debt). More importantly, the interest you pay goes down over time (unless you took the risk of a variable-rate mortgage). It goes down because you pay down the principal, it goes down in real terms because of inflation, it hopefully goes down relative to your salary, and (at least historically) it goes down relative to market rents.

hourislate 5y ago

Housing in Toronto goes up 2k a week. The average price is over 1 million. Unless you inherit Grandmas house, you aren't buying shit on your salary in Toronto. The crisis is now spilling over to all of Ontario. I don't even know what you have to bring home after taxes to save up for a down payment. Most houses are well over 1 million. The house I bought in 2005 for $440k could fetch around 1.2 million today with multiple bids and I guarantee that it will be torn down so a new home can be built on the lot. A new home in my area goes for 2.5 plus million and they can't build them fast enough. https://www.blogto.com/real-estate-toronto/2021/05/toronto-less-affordable-housing-new-york-la/ https://www.blogto.com/real-estate-toronto/2021/05/toronto-l...

throw0101a 5y ago
> and they can't build them fast enough. Which has generally been the problem: lack of supply given current population growth.
hellbannedguy 5y ago
You need to stop that Chinese funny money. Along with the USA. (In the USA any foreigner can pick up a phone, or send an email, and buy our real estate. I can't think of any other country that all allows such easy buys. Now---they arn't suspose to live in them, but it always seem like they do.)

jjav 5y ago

> I would need to spend 2/3 of my monthly income for 30 years But it is not 2/3 of your income for the entire 30 years. Even if it is 2/3rds of your income right now, the mortgage payment only ever goes down due to the three factors of inflation, refinances and (hopefully) raises you get over the decades. Compare to rent which only ever goes up.

HPsquared 5y ago
Interest rates can rise, which would increase the mortgage. Also, buyer's income could fall at some point in the next 30 years.
- danuker 5y ago
  Do banks actually take any interest rate risk? In Romania, there are a few offering a fixed interest rate.
  - vishnugupta 5y ago
    In India the fixed rate is about 2-3% above the prevailing rate (I.e., 12-13% as opposed to 10%) so they kind of pass in that risk to the borrower. Also here, “fixed” means that the rate is subject to change at fixed intervals as opposed to whenever the central bank changes the prevailing interest rate.
- alert0 5y ago
  The majority of mortgages are 30 year fixed. The rates don't change and you would be insane to not get a fixed rate mortgage right now with rates at ~3%.
  - nmca 5y ago
    Where are you getting a 30yr fix from? London, 15yr fixes like 4.5% or something equally silly, 10yr also expensive, 5r common. 30, unheard of for retail mortgage?

isolli 5y ago

Small nitpick: with a mortgage, you pay rent (interest) to the bank for the money you borrowed. However, the interest you pay to the bank is usually less than the equivalent rent (the principal you pay back goes into your pocket by decreasing your debt). More importantly, the interest you pay goes down over time (unless you took the risk of a variable-rate mortgage). It goes down because you pay down the principal, it goes down in real terms because of inflation, it hopefully goes down relative to your salary, and (at least historically) it goes down relative to market rents.