Hi everybody,
I bought this place a year ago with just 5% down and lately have been thinking about increasing the frequency and the amount of the regular mortgage payments so that I eventually reduce my interest payments over a long term. I am not too sure if it works out to my advantage by doing so due the present economic sinario and the real estate market slowing down. I tried to look for this particular info in CD by searching, but could'nt find answers to this specific question. I would appreciate all the inputs.
Thank you all
Location: carl sagan's universe
Posted on: 09-10-08 10:43:45
Where did you buy the property- in a place where the prices are highly volatile like going up 20+% a year and then down 15-20% this past year or so or is it in a more or less stable area where prices went up 5-7% a year and perhaps may have dropped slightly or remained at the same level in the last year or so.?
If you are able to afford increasing your payments or frequency, it is very good to do so.
You will save a bunch in interest payments and shave years off your mortgage.
Right now, the way the market is (for both stocks and bonds and fixed debt investments), mortgage payments provide the best bang for your buck.
Paying towards your mortgage gives you guaranteed return like nothing else.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
As the global economy is slipping towards the "Credit Crunch" and then the so called recession back in US (Canada too), I still see it is a better idea to start thinking about paying off the mortgage. It wouldn't be a bad idea to pay off the debts when the economy is sluggish and at the same time keep an affordable cash flow to sustain in the event of challenge in revenue.
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The cowards never started,
The weak died on the way,
Only the strong arrived.
http://www.youtube.com/watch?v=_yK1i9cLAMM
I agree with other friends here. Paying mortgage is best investment at this time as banks GIC/investments are not working well. If you can find cheapest 5 yrs fixed that is also good as compare to variable interest. Due to credit problem variable interest will go high.
If you or someone has credit card loan/high interest car loan, its better to pay that first.
Thank you all for replying.
Investpro, this house is in Brampton close 410 & Queens. Its a very old place built in late 60's.
If I start to pay more towards a property whose value may be decreasing (i dont know if it is increasing or remaines the same) dont I end up loosing money actually?
Please clarify.
Thanks again.
Quote:You have to pay the mortgage, regardless of the value of your property.
Originally posted by BAsh
If I start to pay more towards a property whose value may be decreasing (i dont know if it is increasing or remaines the same) dont I end up loosing money actually?
Please clarify.
Your property could increase or decrease 100%, but you are still on the hook for paying the mortgage, which is nothing different from any other loan.
In fact, if your property value is decreasing, it is all the more reason to pay it off as soon as you can, so that you lose less money.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
