Bigger cash down or retirement savings?

[disneysteve]

I would definitely take long-term market risk over a guaranteed 5% return. But that's me and my risk tolerance. Yours may differ. I just happen to think it isn't very difficult to outperform 5% over 10 or 15 years, and I've been investing for about 15 years now so I've seen some ups and downs.

Back to the mortgage, you mentioned a 15-year loan but also mentioned a 5-year fixed period. That suggests to me you are looking at some type of ARM, correct? At least here in the US right now, the gap between 5/1 ARMs and fixed-rate loans is pretty narrow and most are recommending taking a the very slightly higher rate on the fixed-rate loan and locking that in for the life of the loan.

[thekid]

Thanks DS. I'm finally starting to warm to long term market risk over lower guaranteed returns. It's just not how I was brought up or how my gf was brought up, so there is a lot of ingrained reflexes in there. I do see the point and am realizing how risk adverse my reflexes seem to be. I gotta balance myself out

As for the ARM, that's all I can get here in Canada. Highest I've seen is 10 yr fixed term. The 10yr fixed is offered at about 5.4% or so whereas the 5yr is at 5%. I should give more consideration to the 10yr!

[TBH]

I just wanted to insert a comment about co-owning real estate outside marriage.

It sounds to me like thekid and his GF are just as committed as most married couples, and they have just as much of a chance of staying together.

However, you do have to protect yourself legally as an unmarried couple because you don't have the built in suite of legal obligations and rights that come with marriage. I know common law is much stronger in Canada in the US, but in the US, you would really have to think about what happens if you own property together and one of you dies. My partner and I bought a house together with rights of survivorship, so if one of us kicks the bucket the other one inherits and becomes owner of the whole house. However, the survivor has to pay inheritance taxes on the value of the inherited portion of the house. Our solution? Getting a lot more life insurance than we would need if we were married.

[thekid]

Originally Posted by TBH

I just wanted to insert a comment about co-owning real estate outside marriage.

It sounds to me like thekid and his GF are just as committed as most married couples, and they have just as much of a chance of staying together.

However, you do have to protect yourself legally as an unmarried couple because you don't have the built in suite of legal obligations and rights that come with marriage. I know common law is much stronger in Canada in the US, but in the US, you would really have to think about what happens if you own property together and one of you dies. My partner and I bought a house together with rights of survivorship, so if one of us kicks the bucket the other one inherits and becomes owner of the whole house. However, the survivor has to pay inheritance taxes on the value of the inherited portion of the house. Our solution? Getting a lot more life insurance than we would need if we were married.

These are great points. There is no inheritance tax (or gift tax) in Canada, so that isn't a problem. However, I actually never had this discussion with her (we are both under 30 and actually never thought of it, as ridiculous as that sounds). I will have to find out how she feels. (she does have quite an affection for the dog, I would hate to co-own with him though, seeing how territorial he is with his toys and all).

[LivingAlmostLarge]

I bought a house with DH before we were married, so I know how wrong it can go. I don't want you to think I'm suggesting that you aren't committed, but sometimes it's a lot easier to just get married. I've heard every horror story after we bought our condo together from people who have done it. And no one we knew had successfully navigated getting married after buying a house together, in real life that is. We repeated our incident a second time, but by that point we had set a wedding date which was technically 1 month after the close.

Second point is that I married a Canuck so I understand more than you can imagine. First canadians typically only have 5 year arms and renegotiate with the bank every 5 years. MIL yelled at me for getting a 30 year fixed, not understanding in the US that's how it's done. She's like how do you know you're getting the absolutely best rate. "How do you know that it won't drop, you are crazy." You should only be getting 5 year arms. Literally that is what she said to me last summer. I showed her the graph and she was so upset that people would lock in rates for 30 years. She kept repeating it was stupid. So say la vie.

So ignore us when we talk mortgages it's different based on what your country norms are, we're not trying to be rude and imply Arms are wrong, we just understand what is our norm.

But in Canada I've heard that it can get messy without being married though there are common law marriages, it depends on the province. Plus it makes it more difficult to get the loan doesn't it? And buying the RRSP sounds great.

I think I wouldn't put more down on the house than necessary. The RRSP can be cashed out without too heavy penalties.