"The equity mortgage is the next revolution in homepurchase financing."Shades of U.S.A. circa 2006. The developers aren't sacrificing anything. Nada. They set the price, you'll recall. All they have to do in this scenario is set the price higher by the amount of the "gift". And voila, the developer books a sale and someone else is on the hook for the risk. Although, not clear who in this case. Is the bank's nose plugged up enough to think this passes a sniff test?
Homebuyers will need 10 per cent of the purchasing price, but League Financial will then loan them an additional 10 to 25 per cent in order to qualify for a 65 to 80 per cent conventional mortgage.
Part of the reduction in risk reflected in a larger downpayment is not some magical higher equity number it is the risk exposure to the buyer's personal capital investment during the buying decision processes as well as a test of ability to save.
Gant said League's equity mortgage results in monthly payments up to 40 per cent lower than a CMHC-insured 25-year mortgage because no payment of interest or principle is required.I can't come up with a response to this except to observe that satire is dead.
"Equity mortgage covers the majority of the downpayment, but ... there is no monthly payment for it," he said. "Relying solely on debt is old fashioned and just plain dangerous."
Hat tip: Patriotz commenting at vancouvercondo.info