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question regarding mortgage?
- Thread starter rashidme
- Start date
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bank has already approved me for 2.99%!!!
johnp
Well-known member
just for a laugh I checked BMO's rates and found 3.09% for a 5 year rate. You might negotiate better.
http://www.bmo.com/home/personal/banking/mortgages-loans/mortgage/special-offers/low-rate-mortgage
From a quick read I think the difference between this 'low rate' 5 year mortgage and the normal BMO 5 year rate which is 5.24% is:
- any costs e.g. getting an appraisal, is extra cost
- you don't have the option of prepaying at e.g. 10% of original value of the mortgage once/year.
Before going ahead I would browse the bank sites (how I got the info) - but for sure call a mortgage specialist at a major bank to get the word on your offer v.s. bank products. You can be sure the bank personnel would know the bumps and warts at Mortgage Emporium.
Contact a BMO mortgage representative at 1-800-665-9665.(from bmo.com).
http://www.bmo.com/home/personal/banking/mortgages-loans/mortgage/special-offers/low-rate-mortgage
From a quick read I think the difference between this 'low rate' 5 year mortgage and the normal BMO 5 year rate which is 5.24% is:
- any costs e.g. getting an appraisal, is extra cost
- you don't have the option of prepaying at e.g. 10% of original value of the mortgage once/year.
Before going ahead I would browse the bank sites (how I got the info) - but for sure call a mortgage specialist at a major bank to get the word on your offer v.s. bank products. You can be sure the bank personnel would know the bumps and warts at Mortgage Emporium.
Contact a BMO mortgage representative at 1-800-665-9665.(from bmo.com).
Red_Liner740
Well-known member
I'm all smiles now....my mortg renawal is coming up soon and i was planning on locking myself in for 5 years vs variable that i'm on now....glad to see that i'll be able to lock in at the same % as my variable.
starboy869
Well-known member
If you drop another $50/m on top of your mort. on 300k you'll take off about a year and bit of your 25 year mort. Pretty much saving about $15000 in interest charges.
Make it another $25 more for $75/m total and your mort will be 23 years an a bit. pretty much saving you just over $25k
Make it another $25 more for $75/m total and your mort will be 23 years an a bit. pretty much saving you just over $25k
And if you pay weekly you save even more, like 8 years on a 25 year
And if you pay the 300K up front you save ALL the interest but than the whole point of a mortgage is that you don't have the money. I'm on a 30 year variable rate now at 2.15%. I'm happy with it. If I want to pay more I have that option almost any time.
My point is paying more often will save you a lot more than paying more. Lets say my mortgage is 700 a month, if I break that up to weekly payments instead of monthly I save a large amount of time off my mortgage vs adding an extra 75$ a month. I'd rather pay 175$ every week to make up that $700 and have my 25 year mortgage paid in 17 years than pay an extra 75$ a month to save 1 year. With weekly payments my monthly cost is the same and I don't have to find extra $ or do with out compared to the scenario suggested by star boy. Not many people have the 300k to lay out but paint less more often saves more than paying more less often
Red_Liner740
Well-known member
Oh believe me, i've researched all of this.
I'm paying 2.2 variable right now....well prime minus 0.8.
The reason i want to lock myself in is that i know the rates cant go much lower than what they are but they can definitively climb.
Also i pay accelerated bi-weekly PLUS another 100 a payment. I dont really feel the extra money coming out but it def makes a HUGE dent in the number of years left on the mortgage. It also helps that my mortgage payment is nothing ridiculous like it would be if i bought ANYTHING in Toronto.
I'm paying 2.2 variable right now....well prime minus 0.8.
The reason i want to lock myself in is that i know the rates cant go much lower than what they are but they can definitively climb.
Also i pay accelerated bi-weekly PLUS another 100 a payment. I dont really feel the extra money coming out but it def makes a HUGE dent in the number of years left on the mortgage. It also helps that my mortgage payment is nothing ridiculous like it would be if i bought ANYTHING in Toronto.
Paying weekly IS more money than paying monthly though since you're paying EARLIER. If you get paid weekly weekly mortgage makes sense. If you get paid biweekly, a biweekly "accelerated" mortgage payment makes sense too. I get paid monthly, so weekly or even biweekly payments would be a huge pain in the *** to budget. I think the payment style should reflect how you get paid.
That extra PIA to budget the accelerated bi-weekly vs monthly would be a much better benefit. Crunch the numbers, they won't lie.
Aside from that, what's the hurry to pay down a 2-3% mortgage when that money could be invested earning you 5-7% ? Real estate appreciation isn't as quickly moving as it once was and unless you're in an extremely desirable area, I doubt your house price has moved much the past couple of years.
TLDR: What's the hurry to pay off the mortgage when rates are so low?
I have to buy gas for the car/bike every week, have to buy groceries every week, what's one more payment? I went with weekly even though I get paid biweekly because it saves one extra year and doesn't cost me any more on my monthly budget. 8 years of payments is a lot of $$$$. Hell even a year is a lot of cash, that alone could buy me a bike
Taxes.
Interest on a mortgage isn't tax-deductible (like it is in the US), while gains on investments are taxed. Although (in the highest brackets), it's only 25% for capital gains and 50% for dividends, it still mitigates the difference between a non-guaranteed gain vs a very guaranteed liability.
Also factor in that people generally aren't very good investors. When they have cash in hand, they either spend it or make bad investments.
A very professional couple I know crunched the numbers and decided they would rent instead of own, putting the money into stocks and funds. They ended up investing part of it, since the money they had in hand found other places to go to (furniture, unexpected expenses, etc), and as for their investments, this was back in 2008...
Generally speaking, unless you're a disciplined investor, for most people, paying down the mortgage is the safest bet.
^^ Understandable.
I like what you guys did though. Sell it all, pick a direction and giv'r! Safe travels.
silvrsurfr
Well-known member
My only advice for these 'utlra' low rates (vs 2.99% or 2.945%) is to be aware of the products' features? Is it a no frills mortgage product, meaning you cannot transfer the mortgage out until its term is up? (unless you sell the house) Can you make prepayments on the mortgage? Are you allowed to increase the payments? Can you choose the frequency to one that you want? ie. bi-weekly instead of monthly...etc. Most times these low rates come at a cost in a limited product.
As for Variables these days; the discounts aren't what they were a few years ago when they were .70% - .90% below prime. At best you may get .20% below prime. Considering a lot of fixed rates are the same or lower, a lot of my clients are looking at getting a short term, like a 2yr fixed term @ 2.49%. When you come up for renewal, if the heavy discounts are back renew into a Variable mortgage. The short term fixed rates are the 'new' Variable.
And as for payments, easiest thing to do - if you payment is say $466 bi-weekly, round it up to $500. The extra few dollars will have a huge positive impact to your mortgage and savings. As others have said here, it will reduce your Amortization significantly. And you won't even feel the difference in month to month cash flow.
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