The politically correct mentality and faulty mindset (that everyone is ENTITLED to home ownership whether they can afford it or not) that enabled the sub prime mortgage fiasco to spread throughout the USA and the world is still alive and well even in Canada. It seems that if one can fog a mirror one can still get a loan in today’s upside down world! Loopy Lenders are still everywhere to be found and now survive because of the need for bailout loans. A bailout loan is fine, but please don’t lie to the borrowers! An amortization schedule would easily alert a naive borrower to the fallacy of this loopy lenders advertisement that appeared in a recent Canadian publication.
First of all, the loopy lender cannot get the monthly payment correct for a 25 year amortization period. In fact the monthly payment of $261.39 almost turns the mortgage into a 40 year amortized loan.
Secondly, the loopy lender pulls a $1500 minimum monthly payment out of a hat and subtracts the monthly payment from it and calls it “savings per month”. This is nonsense and a play on words! Anyone signing on to this idea is saving nothing. The borrower has reduced his/her monthly outlay of cash from an arbitrary “minimum payment”. The borrower still must make monthly payments of $271.29 for 35 years to pay back the $50,000 loan.