Originally Posted by ut0pia
It's common knowledge to me now, that people in general are not smart. But why dont' bankers realize this? What kind of a bank gave him a mortgage for that kind of money, given his salary? My dad was approved for a $400,000 mortgage, he doesn't make more than $40k per year, and that was based only on his income. He didn't take it, but had he wanted to, he could have. Someone less responsible most definitely would have taken all that he can get, and I don't think we can rely on people to always make the most responsible decisions in general.
That's the big difference between the banks here in Canada and the US banks. I heard on the news that our banks weren't in trouble like the US banks and now I think I understand why. The banks here will only give you a mortgage in proportion to your income, and with what you already owe taken into consideration. As I said in another post some months ago, when we moved and were getting a new mortgage, she told me that even though I had a zero balance
on each of my department store credit cards that the bank considered them to be maxed out
because as soon as the mortgage papers were signed and approved I could have gone out and maxed them out so because each had $2,000 limit I was considered to have $6,000 debt on the 3 cards. She said it was better to just have one credit card - usually a Visa or Amex. I immediately cancelled my department store credit cards and cut them up.
My hubby and I both have good jobs and make decent money but I can tell you right now there is no way any Canadian bank would give us a mortgage for an $8,000,000 house. That is just ridiculous. I cannot imagine how that couple would even be able to afford the taxes on that house never mind the mortgage payment.