Posted on: 25-09-08 21:56:13
I have just Landed in CANADA 2 months back and have sold my house in INDIA. I am planning to buy a house, my question is:
1)If you can pay cash with all your savings, what I mean by all saving is 0 balance in your account with a permanant job and regular income, is it worth buying it on cash or MORTGAGE is better.
2) If you opt for mortgage but at one point you want to pay the whole balance ; is there any kind of fine.
Will really appreciate any replies.
I am not a mortgage expert but I can tell you one thing. Keep a cash balance always with you. Easily accessible cash. Remember you may need that at any point of time. Or at least get a LOC.
Quote:
Originally posted by Shah Ji
If you can pay cash with all your savings, what I mean by all saving is 0 balance in your account with a permanant job and regular income, is it worth buying it on cash or MORTGAGE is better.
Yah I understand that can be a big risk, but I just want to know that is there ANY benefit in going for cash against Mortgage, LOC; do you mean credit card.
Quote:
Originally posted by Shah Ji
2) If you opt for mortgage but at one point you want to pay the whole balance ; is there any kind of fine.
Will really appreciate any replies.
Shah ji,
I am not a mortgage expert either but I will try give you some information.
There are two type of mortgage (in terms of pay off) 1) Open 2) Closed. This can be amortized for say 25 year. Within these 25 years you can have five terms for 5 year each (just an example) For each term you negotiate a interest rate and other terms and condition of a mortgage.
In open mortgage you can pay the balance at any time and there is no panelty.
In closed mortgage there is panelty if you want to pay the remaining amount within a term. However at the end of the term say 5 years you can pay your mortgage without panelty.
LOC mean line of credit. Basically financial institution keep some money aside for you to use at any time. Again ther are two types of LOC. Secured and unsecured.
You may want to sit with a bank or mortagage specialist to know fine details of financial term related with house purchase.
Visit http://www.tdcanadatrust.com" rel="nofollow">LINK under mortgage sections
I am sure you will get lots of answers from financial specialist at CD
Good luck
Very interesting topic, really would be a good discussion if some Mortgage/Financial specialist can put some more light on it. I am not a specialist in either of these feild but interested to know more about the PRO & CONs of both Cash Vs Mortgage.
… I am not a mortgage expert …
-Iceburg
… I am not a mortgage expert either …
-rsbagwell
… I am not a specialist in either of these fields …
-gags
I know there are some on the Forum and can reply better. My input (again as a non-expert) is; if one do not have a better investment option with the cash in hand, then good to go for buying CASH. Mortgage involve some intrest portion whatever. But again, situation might change after some time when cash is already locked in.
As a side note and to clarify; my son paid his student loan on day one (of getting due for payment) as he was to pay say 6 % interst on that; whereas cash sitting with him in savings was fetching about 4.5 %.
Any better suggestion?
-Ben
Quote:
Originally posted by Shah Ji
I have just Landed in CANADA 2 months back and have sold my house in INDIA. I am planning to buy a house, my question is:
1)If you can pay cash with all your savings, what I mean by all saving is 0 balance in your account with a permanant job and regular income, is it worth buying it on cash or MORTGAGE is better.
2) If you opt for mortgage but at one point you want to pay the whole balance ; is there any kind of fine.
Will really appreciate any replies.
Mortgage is a debt. It makes sense to live debt free. Many people prefer doing exactly the same.
However, tax savvy individuals understand the difference between good debt and bad debt. It may make sense to write off interest, if you borrow to invest. Sometimes, people buy their home in cash, later take out an equity loan to buy/invest in a business/investment property/mutual funds/stocks etc. Doing this they write off their interest payments, lowering their income tax.
It is prudent to consult a tax consultant or a qualified financial advisor before taking the above steps.
The second part of your question has been answered already. That is, to opt for an open mortgage term.
Regards,
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