从LINE CREDIT 借钱还MORGAGE怎么样?一年可节省利息1000.不知到对否?
- 主题发起人 lhq2100
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The answer is not straightfoward but no worries, you will save more than $1000.
$100,000 different of 1% is $1000 if its simple interest. Fortunate enough, mortgages and line of credits interest are calculated daily, so the more you paid the principle earlier, you save more interest in upcoming years.
Assuming all payments remain the same as when you are paying your mortgage at 5%. You will definitiely save more than 1000$ per year. But will the interest rate of your line of credit rising is another concern.
Good luck.
$100,000 different of 1% is $1000 if its simple interest. Fortunate enough, mortgages and line of credits interest are calculated daily, so the more you paid the principle earlier, you save more interest in upcoming years.
Assuming all payments remain the same as when you are paying your mortgage at 5%. You will definitiely save more than 1000$ per year. But will the interest rate of your line of credit rising is another concern.
Good luck.
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yes, you can! i did this before
I am not clear about RE-financing. I have a yr fixed morgage.
I am not clear about RE-financing. I have a yr fixed morgage.
Assume I have 100,000 left in Principal.
If I can get 100,000 refiance from another lower interest bank to pay the current high interest principal. It will save a lot.
How to operate it? Is it possible? Does anyone have experience to share?
I am not clear about RE-financing. I have a yr fixed morgage.
Assume I have 100,000 left in Principal.
If I can get 100,000 refiance from another lower interest bank to pay the current high interest principal. It will save a lot.
How to operate it? Is it possible? Does anyone have experience to share?
FromVancouver
知名会员
Get a line of credit account
PC Financial has a good rate for line of credit (prim +1), (maybe) but not sure what is the max they will give you.
The other method is: if u have house, go to bank to open a line of credit - home equity. The max amount mostly (cannot rememb exactly) 70% of net amount of your house value. say, if your house value 300,000 but you still own 150,000, u can get 150,000*70%=105,000.
The rate, now is prim + 1. I did last year in TD and the rate was just prim forever until I sell the home.
Two things:
1. May u need pay $200 lawyer fee, sometime bank will pay for you.
2. when you sell the house later, u have to pay about $50 fee for cleaning the account.
So, anytime, I withdraw money from there when I need, and pay back when I have money. the rate is 3% now.
wish Help!
New friend
PC Financial has a good rate for line of credit (prim +1), (maybe) but not sure what is the max they will give you.
The other method is: if u have house, go to bank to open a line of credit - home equity. The max amount mostly (cannot rememb exactly) 70% of net amount of your house value. say, if your house value 300,000 but you still own 150,000, u can get 150,000*70%=105,000.
The rate, now is prim + 1. I did last year in TD and the rate was just prim forever until I sell the home.
Two things:
1. May u need pay $200 lawyer fee, sometime bank will pay for you.
2. when you sell the house later, u have to pay about $50 fee for cleaning the account.
So, anytime, I withdraw money from there when I need, and pay back when I have money. the rate is 3% now.
wish Help!
New friend
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1。bank doesn't allow you to repay total, there are limits on how much you lump sum payment you can repay per year
2。if you can repay total amout (or very close to total amout), then it is fine, but if you can repay only a small portion, but with a relative big amount, then you will face incresaing negative net cash flow, because you have to pay interest of your LOC in addition to you morgage
巴菲
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You could take advantage or risk of it. The rate of your LINE CREDIT normally goes with PRIME rate. Like today, you gain because PRIME dropped 0.5%. Someday you may lose if PRIME goes up.
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你现在的银行可能要收取你BREAK CONTRACT的罚金。这个罚金可能就差不多等于你在剩余的MORTGAGE TERM里面两个利息的差额。如果你现在的TERM剩的不多了，而你要RENEW的TERM比较长利息还比较低，才值得。
Understood. I can not save too much.
Understood. I can not save too much due to I can only prepay 25% of the original principal, which is about 40000.
If the rate diff between Line credit and moregage interest is only 0.01. The save is only 40000*0.01=400 per year;
If the rate diff between Line credit and moregage interest is only 0.02. The save is only 40000*0.02=800 per year;
Understood. I can not save too much due to I can only prepay 25% of the original principal, which is about 40000.
If the rate diff between Line credit and moregage interest is only 0.01. The save is only 40000*0.01=400 per year;
If the rate diff between Line credit and moregage interest is only 0.02. The save is only 40000*0.02=800 per year;
FromVancouver
知名会员
If your moregage term ends, and if u have a line of credit account, if u think the variable rate is better than fixed rate at this time, then this is a good time for u to take money from LOC to pay off your rest morgage. LOC is a open variable rate account, easy and just prime (maybe prime +1). that saves u lots of money...
the interest rate of line of credit can be changed
I got a letter from BMO recently and was told the interest rate of my line of credit has been increased by 1%, because they increase the base rate by 1%. I am not sure whether other banks do the same and if I can argue with them...
I got a letter from BMO recently and was told the interest rate of my line of credit has been increased by 1%, because they increase the base rate by 1%. I am not sure whether other banks do the same and if I can argue with them...
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Yes, I got similar letter from CIBC that says 1% increase of rate of LOC.
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Read this article before doing anything about your mortgage.
*****
Mortgage penalty can be a shocker
As interest rates fall to record lows, you may want to break your mortgage and negotiate a lower rate.
But the penalty charges can be prohibitive if you're in the early years of a long-term mortgage at a fixed rate.
Take Marilyn, who recently sold her house because she couldn't afford to keep it. She had a $308,000 mortgage, with three years left on a five-year term at 5.74 per cent. She was shocked when told by the bank that the penalty cost would be about $20,000. "That means I only pay off the bank, the real estate agent and the lawyer," she says.
"I was hoping to have enough cash in my pocket to cover my basic survival needs while searching for my next position."
Another customer, Michael, sold his condo just a year after taking out a $208,000 mortgage at 5.85 per cent.
He was charged $11,000 to break the mortgage, despite having applied for financing on another property he bought.
Both customers assumed they would pay a penalty of three months' interest. That used to be the case many years ago.
Today, most lenders charge a penalty based on the gap between current and past interest rates, the outstanding balance and the number of months left in the mortgage term.
Called the interest rate differential (or IRD), the penalty is higher now than in the past because of how far interest rates have fallen in the past six months.
There's no standard way for lenders to calculate the IRD, says Isabelle Rodrigue, acting team leader of consumer education at the Financial Consumer Agency of Canada.
"It's not an easy thing to understand and most people can't do it on their own. We advise them to shop around and talk to lenders about the benefits of renewing early."
If you're faced with a stiff penalty, you may have some leverage by negotiating with other lenders first.
"Then, go back to your current lender and say: 'I'm planning to leave. Can you do something about the penalty if I stay?'" says Robert McLister, a mortgage planner with Mortgage Architects, who edits a popular blog, CanadianMortgageTrends.com.
Another tip is to make a lump-sum payment before renegotiating.
Many mortgages allow you to pay up to 20 per cent of the balance in any given year.
This lets you lower the penalty, which is calculated on the balance after you have made your prepayment.
Some mortgage brokers find that people are changing their minds about floating rate mortgages.
"There's a significant trend toward variable-rate clients moving into longer term fixed-rate loans," says Calum Ross, senior vice-president at The Mortgage Centre.
"Yes, they're paying a higher rate. But with the current economic uncertainty, they don't feel comfortable taking on additional risk."
With variable-rate mortgages at 3.3 per cent to 4 per cent and five-year closed mortgages at 4.99 per cent to 5.25 per cent, the price gap has narrowed.
In an influential study in 2001, finance professor Moshe Milevsky said that most of the time, people pay less interest over the long run by choosing a variable-rate mortgage.
But in an interview last month at the Canadian Mortgage Trends blog, he said it pays to be in a fixed-rate mortgage 10 to 12 per cent of the time - and this might be one of those times.
Not only has the premium of fixed rates over variable rates largely disappeared, but there are added risks from falling home prices, reduced availability of credit and employment instability.
An environment like we're seeing today brings into question any type of historical study, Milevsky added. Ellen Roseman's column appears Wednesday, Saturday and Sunday. You can reach her by phone at 416-945-8687; by fax at 416-865-3630; or by email at eroseman @ thestar.ca.
From Toronto Star 2009.03.11 Business Edition
*****
Mortgage penalty can be a shocker
As interest rates fall to record lows, you may want to break your mortgage and negotiate a lower rate.
But the penalty charges can be prohibitive if you're in the early years of a long-term mortgage at a fixed rate.
Take Marilyn, who recently sold her house because she couldn't afford to keep it. She had a $308,000 mortgage, with three years left on a five-year term at 5.74 per cent. She was shocked when told by the bank that the penalty cost would be about $20,000. "That means I only pay off the bank, the real estate agent and the lawyer," she says.
"I was hoping to have enough cash in my pocket to cover my basic survival needs while searching for my next position."
Another customer, Michael, sold his condo just a year after taking out a $208,000 mortgage at 5.85 per cent.
He was charged $11,000 to break the mortgage, despite having applied for financing on another property he bought.
Both customers assumed they would pay a penalty of three months' interest. That used to be the case many years ago.
Today, most lenders charge a penalty based on the gap between current and past interest rates, the outstanding balance and the number of months left in the mortgage term.
Called the interest rate differential (or IRD), the penalty is higher now than in the past because of how far interest rates have fallen in the past six months.
There's no standard way for lenders to calculate the IRD, says Isabelle Rodrigue, acting team leader of consumer education at the Financial Consumer Agency of Canada.
"It's not an easy thing to understand and most people can't do it on their own. We advise them to shop around and talk to lenders about the benefits of renewing early."
If you're faced with a stiff penalty, you may have some leverage by negotiating with other lenders first.
"Then, go back to your current lender and say: 'I'm planning to leave. Can you do something about the penalty if I stay?'" says Robert McLister, a mortgage planner with Mortgage Architects, who edits a popular blog, CanadianMortgageTrends.com.
Another tip is to make a lump-sum payment before renegotiating.
Many mortgages allow you to pay up to 20 per cent of the balance in any given year.
This lets you lower the penalty, which is calculated on the balance after you have made your prepayment.
Some mortgage brokers find that people are changing their minds about floating rate mortgages.
"There's a significant trend toward variable-rate clients moving into longer term fixed-rate loans," says Calum Ross, senior vice-president at The Mortgage Centre.
"Yes, they're paying a higher rate. But with the current economic uncertainty, they don't feel comfortable taking on additional risk."
With variable-rate mortgages at 3.3 per cent to 4 per cent and five-year closed mortgages at 4.99 per cent to 5.25 per cent, the price gap has narrowed.
In an influential study in 2001, finance professor Moshe Milevsky said that most of the time, people pay less interest over the long run by choosing a variable-rate mortgage.
But in an interview last month at the Canadian Mortgage Trends blog, he said it pays to be in a fixed-rate mortgage 10 to 12 per cent of the time - and this might be one of those times.
Not only has the premium of fixed rates over variable rates largely disappeared, but there are added risks from falling home prices, reduced availability of credit and employment instability.
An environment like we're seeing today brings into question any type of historical study, Milevsky added. Ellen Roseman's column appears Wednesday, Saturday and Sunday. You can reach her by phone at 416-945-8687; by fax at 416-865-3630; or by email at eroseman @ thestar.ca.
From Toronto Star 2009.03.11 Business Edition
