DELETE TOPIC PLEASE

[franky1]

delete

[Jawhead999]

The shorter the duration, the smaller the interest rate.
The longer the duration, the higher the interest rate.

You're using an example where taking a mortgage for 15 years and 30 years has a same interest rate, this is unrealistic you will not find this in reality since they've calculate it.

There's no trick to save money except using an old school strategy where the house is used for rent, making money etc.

[inthelongrun]

Yes, usually interest rates vary from its terms. In my country, the government standard looks like this.



So the interest rate on shorter terms is always lower. It could be taken advantage but it also depends on a country's inflation rate. If the inflation is higher then going for a longer-term loan is just fine. However, in rich countries, people are mostly capable of taking short-term loans.

In developing and poor countries, it is nearly impossible for normal mid-level citizens to pay their housing loans in the short term. I noticed that most here in my country, went for a 30-year housing loan term. Nonetheless, the rate is still lower compared to a regular bank loan which is around 18% to 24% here.

[franky1]

The shorter the duration, the smaller the interest rate.
The longer the duration, the higher the interest rate.

You're using an example where taking a mortgage for 15 years and 30 years has a same interest rate, this is unrealistic you will not find this in reality since they've calculate it.

There's no trick to save money except using an old school strategy where the house is used for rent, making money etc.

actually there were interest rates higher for people with bad credit, but there is a limit of "smaller" interest for good credit
so someone with great credit wont see much of a difference changing duration
(yea i looked into that before prepping numbers)

funny part is a HSBC 2 year fix standard is 5.39% in the uk
funny part is a HSBC 5 year fix standard is 4.89% in the uk
so we brits have things opposite to 'inthelongrun' country

other searches

According to our mortgage partner Better.co.uk,
the average two-year fixed rate deal across all borrower types* stands at 5.28%,
with three-year deals averaging 5.20%.
The average cost of a five-year fixed rate today has fallen to 4.98% from 5.05% yesterday.

[NeuroticFish]

you know you can afford monthly payments of $1621/m
meaning the difference of the 1162 vs 1621 means if you put as an extra $459 ontop of the $1162 to

Actually even if this trick would not work, this approach is always advised imho because although you know you can pay 1621 today, things can change for the worse (recession, loss of job, technical unemployment) and then this $459 difference can do wonders to the levels of stress you'll go though.

[franky1]

you know you can afford monthly payments of $1621/m
meaning the difference of the 1162 vs 1621 means if you put as an extra $459 ontop of the $1162 to

Actually even if this trick would not work, this approach is always advised imho because although you know you can pay 1621 today, things can change for the worse (recession, loss of job, technical unemployment) and then this $459 difference can do wonders to the levels of stress you'll go though.

yep the added bonus of reducing back to 1162 and still be defined as paying the mortgage but able to use the 459 to go towards other things

i personally thanks to bitcoin dont need to worry about such things but after reading many topics about people looking for ways to save on groceries and bills and surviving doomsday scenarios. everyone is looking for ways to economise or pay down debt sooner to secure their futures stress free

[Captain Corporate]

The issue (and by that I mean the only issue) is that not every nation and not every bank has this option and this return. OP has made a calculation based n a thing that is on a website, we need to all go to our bank, ask this, and see the proof on paper that if we want to do it, then we can do it. I personally do not know if I can pay more of my debt right now, or something like this. I have a loan based on a medical bill, which is fine and I am paying that every single month, it was for a drug and the bank saw that I have received my debt before and paid it all and they gave me the loan for this too. However, does that mean I could pay a bit more every month? The option is not showing up on my app, where I pay it off every month. So this may sound great, but not be available for everyone.

[franky1]

The issue (and by that I mean the only issue) is that not every nation and not every bank has this option and this return. OP has made a calculation based n a thing that is on a website, we need to all go to our bank, ask this, and see the proof on paper that if we want to do it, then we can do it. I personally do not know if I can pay more of my debt right now, or something like this. I have a loan based on a medical bill, which is fine and I am paying that every single month, it was for a drug and the bank saw that I have received my debt before and paid it all and they gave me the loan for this too. However, does that mean I could pay a bit more every month? The option is not showing up on my app, where I pay it off every month. So this may sound great, but not be available for everyone.

yes definitely worth contacting the debt supplier. if already in debt and want to renegotiate a deal
because usually the amount you pay in is not all going towards the principle debt, but instead the interest they lump ontop. especially in the early years of paying off debts.
so see if you can pay more that goes straight to lowering principle or re-negotiate debt to an extended length. reduce the monthly demand, lower interest. but then paying the excess to then go straight to the principle

definitely contact them if you have more then one debt with the same company because if you did pay more on one debt they may consider that as paying into another debt where you were making just interest only payments on(minimums). so ensure the extra funds go into paying the correct intended thing

obviously dont explain the trick to them. just ask them for the amounts that change if you extend life of debt,if there are better rates to refinance to.. and ask if you can pay back more then set demands early/regularly. because they might decide to mess with the interest by re-financing into higher interest out of spite rather then giving best deal available if you explain too much about trying to pay off debt while giving them less profit

[Darker45]

When I was a small child, I remember my grand aunt advising us not to take a long-term loan to build a house. She said they were already old but are still paying for their house. It sounded right for many years. And because I also hate debts, I thought if I have to borrow to build a house someday, I should pay it as soon as possible. Not to mention that the longer your paying time the bigger you pay.

But then I realized later on that with all the nincompoops running my country one after another, with all their inutile appointees and policies, I'd rather take that maximum paying time. After a decade or two, my monthly payment might just be a mere spare change thanks to uncontrolled inflation.

So, to those who are living in a country as poorly-run as mine, even if you can afford a higher monthly amortization, you might want to consider choosing the lowest option. Use your extra money for something else more productive.

[franky1]

When I was a small child, I remember my grand aunt advising us not to take a long-term loan to build a house. She said they were already old but are still paying for their house. It sounded right for many years. And because I also hate debts, I thought if I have to borrow to build a house someday, I should pay it as soon as possible. Not to mention that the longer your paying time the bigger you pay.

But then I realized later on that with all the nincompoops running my country one after another, with all their inutile appointees and policies, I'd rather take that maximum paying time. After a decade or two, my monthly payment might just be a mere spare change thanks to uncontrolled inflation.

So, to those who are living in a country as poorly-run as mine, even if you can afford a higher monthly amortization, you might want to consider choosing the lowest option. Use your extra money for something else more productive.

stretching the length can lower the monthly payment meaning you are lowering the REQUIRED DEMANDS thus de-risking defaults of the min demand that can get you in trouble if not paid.. however dont then waste the excess cash you can be left with.

if the mortgage rate is 5% but you can put that excess into a 7-12% investment. then you can be better off investing. or you can pay off debt sooner

[adaseb]

Yeah here in Canada we got people extending their amortization by over 30 years. I think the max is maybe 35 hours if you got enough equity.

The issue is that at 7% interest your payments are hardly small and you barely touch the principal. It’s basically a trap and you become more or less a renter to the bank.

Mortgages should be any more than 25 years.

[pinggoki]

Yeah here in Canada we got people extending their amortization by over 30 years. I think the max is maybe 35 hours if you got enough equity.

The issue is that at 7% interest your payments are hardly small and you barely touch the principal. It’s basically a trap and you become more or less a renter to the bank.

Mortgages should be any more than 25 years.

But can't you like pay directly to the principal monthly so when the due for the amortization comes, the interest gets smaller? What I mean is that you can pay the principal amount if you only have an extra money though but I don't know about in your country but that's how some people do it in my country when they do a housing loan although it can only be done when you have an extra money left after all the expenses for the month.

[itorai]

The shorter the duration, the smaller the interest rate.
The longer the duration, the higher the interest rate.

You're using an example where taking a mortgage for 15 years and 30 years has a same interest rate, this is unrealistic you will not find this in reality since they've calculate it.

There's no trick to save money except using an old school strategy where the house is used for rent, making money etc.

What you say is true, and where I live there is a house rental entrepreneur where every month he makes a lot of money from it, in fact it is considered net income because he applies a rental system only and does not include electricity, water and other costs. etc. (It's all borne by the renter)

[yhiaali3]

Personally, I don't like debt and I don't like mortgages, except in cases of extreme necessity when there is no alternative or other option, so I avoid them all the time.

But if I had to, I would prefer to pay the debt in installments over the long term (30 years, for example), as the monthly installment with interest will end up being worthless after many years, because the paper currency loses its value over time.

This is the only practical benefit I see in a debt or mortgage as the property you get will have value while the money you pay at the end of the repayment will have almost no value.