Hello guys

I'm pretty new to this section of the forum and I just have a few question to ask. I'm looking to buy a house next year in Canada because my brother is going to the school in the same city as I am working. So I figure it out that it would be a smarter idea to buy a house for the both of us to live in instead of paying someone rent.

The price value of the house is about $200,000 CND and the mortgage rate is about 4.3- 4.9% fixed for 5 years. I have saved up for a 13% down payment. I'm currently working full time and have some money invested into the stock market.

Do you guys think I should pull out of the market and use my investment money to make a bigger down payment? or should I use the money I make in the stock market to make a bigger payment toward the mortgage each month?

Thanks for the help

 

Do you have to pay PMI if your downpayment is less than 20%?

Any tax incentives for owning a house?

 

This is assuming you make money in the stock market every month. That's not guaranteed.

I know everyone doesn't agree, but my personal opinion is that if you've done your due diligence and can afford it, buying a house is a better idea than renting for the next 5 years. But be careful of that adjustable mortgage at the end of the five year period. That's what has forced so many people from their homes.

 

I would advise against paying PMI if you get hit with it for putting down less than 20%. Here in the states itd be like 140 bucks a month on a 200k house...thats alot of money for NOTHING!!!

 

Well here in Canada. If you put 0 down to own a house then you pay a extra 2% insurance towards your mortgage. Meaning my mortgage rate will be somewhere in 6.9% that's if I go with 0 down but if I'm putting a 20% down payment I just pay 4.9% mortgage.

Right now in the stock market. I'm getting a nice monthly dividend of $450.00 each month.

 

Buy the house, but put 20% down

 

Can you do a split mortgage? E.g., when I bought my house, I put down 5% and then I got two mortgages: a primary at a good interest rate to cover 80% of the cost and a secondary to cover the other 15%. That way, I don't pay PMI, however I do pay a slightly higher interest rate on the secondary mortgage. But, since that rate is lower than I hope to make in the market (plus the interest is tax deductible), I felt like that was a better decision than pulling out more money just to have the full 20% down payment.

 

I say look at it mathematically. If you are making more than 4.9% (or whatever the final % would be if you put down 13%) interest every month in the stock market then keep the money there. If you are making less than 4.9%, then pre-paying the principle of your mortgage is essentially the same as getting 4.9% interest return. Of course you need to take any tax incentives into account as well, but even those only essentially lower your mortgage rate by .9% max.