Although exact pricing was not yet available, rates are expected in the 9% range given that this is an uninsured alternative lending product with an extended amortization and potential higher risks
Can you feel affordability flowing?
EDIT : Just for fun, I ran the numbers :
• Loan of $500,000 at 7% over 25 years: monthly payment $3,534, total interest $560,169
• Loan of $500,000 at 7% over 30 years: monthly payment $3,327, total interest $697,545
• Loan of $500,000 at 9% over 40 years: monthly payment $3,857, total interest $1,351,268
I don’t even understand the existence of this product…
The only reason I can see is that the mortgage isn’t funded by Equitable Bank but by a third-party lender. So I wonder if this is a way to circumvent the lending ratios on mortgages, which would allow people to qualify for higher amounts despite the higher interest rate.
Why did you increase the interest rate to 9% for your 40 year calculation?
Edit: oh, in the article it says they expect rates to be in the 9% range.
I agree with the other commenter. With the higher rate and no benefit of the longer amortization period, this is insane. Doesn’t do anything to help people trying to afford a mortgage.
Can you feel affordability flowing?
EDIT : Just for fun, I ran the numbers :
• Loan of $500,000 at 7% over 25 years: monthly payment $3,534, total interest $560,169
• Loan of $500,000 at 7% over 30 years: monthly payment $3,327, total interest $697,545
• Loan of $500,000 at 9% over 40 years: monthly payment $3,857, total interest $1,351,268
I don’t even understand the existence of this product…
Madness.
The higher rates more than negate any benefit to monthly payments of extending the amortization. I have no idea why someone would choose this.
The only reason I can see is that the mortgage isn’t funded by Equitable Bank but by a third-party lender. So I wonder if this is a way to circumvent the lending ratios on mortgages, which would allow people to qualify for higher amounts despite the higher interest rate.
Why did you increase the interest rate to 9% for your 40 year calculation?
Edit: oh, in the article it says they expect rates to be in the 9% range.
I agree with the other commenter. With the higher rate and no benefit of the longer amortization period, this is insane. Doesn’t do anything to help people trying to afford a mortgage.
Yes… With current rates below 6% and going as low as 5.4%, the difference is even higher.
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