Okay, so we're a bit cynical about how you find your first mortgage - maybe it's by talking to the bank manager at the first bank where you happened to open your first chequing account... or maybe it's by talking to the owner of the first mortgage-related, or BC mortgage-related, website that you happened across while searching on MSN, Yahoo!, or Google. And before we get into talking about how we're providing marketing for a mortgage broker that specializes in finding the best mortgages for people (local or remote) who happen to want to purchase land, property, or real-estate in the fertile and mineral-rich province of BC, let's talk a bit about why people should consider doing business with a company that views mortgages differently - with the appropriate level of fear and respect - and with the point of view of protecting your interests, as much as possible, even recognizing the problem of agency (i.e. that no person or corporation can truly act as your agent without also itself having its own interests). And what if it could be extremely profitable to open one's mind to the possibility of a different way of purchasing a home, which did not have such a dependence on the debt markets and the companies that perform arbitrage on the debt markets on your behalf...
We're well aware that people may come to this site by searching for an 'interest only mortgage', or a 'low interest mortgage', or for 'cheap mortgages in bc'. But what would the housing market look like if instead you were looking for 'interest free mortgage' or 'negative interest mortgage'?
Are these such laughable ideas? In fact, it might be shown that a bank would not need to charge interest on mortgages, under the current schemes of banks lending multiples of their available capital, and of rising housing prices, in order for them to realize profits, simply because of the elevated values of houses in the time it takes for marginal borrowers to forclose. Already, there are many banks that 'loan to own' by charging interest rates that are high enough to force a foreclosure, which creates the opportunity to make a profit on the resale of the house.
In fact, the way that banks are lending money that they do not need to have, in order to facilitate the purchase of equity that many people do not need to own, banks could probably make money even if they charged a negative interest rate.
But negative and zero interest loans have other interesting applications. Imagine getting 'paid' only in loans with negative interest rates, instead of calling this money income - this would effectively spread your taxable income over the period needed for the loan to evaporate, resulting for many people in a situation of staying below the exemptions.
Back to the problem at hand, which is that you are probably seeking a home to live in or as an investment, but, lacking the necessary funds to do this, you are interested in getting some help in procuring the necessary funds, and you realize that there's a cost, and you're fine with that.
But what is the true cost? First, there's the obvious cost of the interest on the unpaid balance over the life of the mortgage, so that usually as a rough rule of thumb you can multiple the cost of that house by two to get the true amount that you're paying into it. Next, there's the cost of qualifying for the mortgage, which is to say that you have to prove that you're paying taxes on the income required to sustain your household expenses + mortgage. The cost of paying taxes on a 60,000 income in Canada is approximately 22,000 per year. So, if you can get out of paying those taxes, then you effectively have 22,000 to pay for rental, or about 1900/month. If you purchase a property that would rent out for about 1900 per month, then you'll end up paying about 2200 per month on your AFTER-TAX income. But if you want a mortgage, in most cases, you must show that you're declaring enough income to qualify for the mortgage after taxes have been paid. So the taxes are essentially the cost of entry into the world of debt. If you are employed and pay taxes, then congratulations, you probably qualify for a mortgage.
Now, what is the interest rate you would like to have on your mortgage? 14%, 10%, 6%, 3%? In fact, if you structure your life to avoid tax, and rent the place, and then save up the amount you would have paid into a mortgage, you're ahead of the game.
But go ahead - if you want a mortgage in bc, or a bc mortgage, or whatever we have to call it in order to attract people to find out about cheap mortgages in bc, or interest-only mortgages, or whatever type of financial drug that is called for to purchase the property at the rate agreed upon between consenting adults, then
