Should i pay off my mortgage with lump sum payments?

KBE6EKCTAH_CCP said:
Excellent point. People lose money on investments, frauds, etc. If you invest intelligently it won't happen but NOTHING is safer than paying off debt on your primary residence, which you can always re-leverage if you want.

Lastly, we are talking about roughly 100K of lump sums over 4 years at 1,5%. Safe investments yield what, 4% in the US? He'll end up with 3K more of taxable income, which isn t worth the headache.

My vote is to go for the lump sums.
Click to expand...

4% real on average, compared to 1% real for RE, but that's the hundred year average. Maybe we get a president who guts the stock market, or a local government becomes a sanctuary city and puts a halfway house next door to you, or the communists make you rent a room for free, or the stock market goes to zero, or maybe the stock market is flat for 30 years because it is so overvalued but anti-immigration laws makes new housing construction unaffordable so existing home owners outperform the stock market by 5© a year.

Who knows. The future could be anything.
 
At 1.7 no. You should pay the minimum and invest whatever you have leftover. Come April 2026 that probably changes though
 
Remember to put some money aside to enjoy life now. Life is short.Your children dont need everything handed to them. You can always make more money if needed, but you cant turn back time. Thats my best advice.
 
Bunch of financial illiterates ITT.


1.7%? That’s basically free money when you realize inflation is multiple times that in actuality.

The only reason to pay down debt is if the interest rate is higher than the rate at which the money is debasing.

You can literally spit and find basic high yield savings accounts for 5%. Take this “lump sum” of cash and earn on it. Don’t waste it by paying off free money.
 
SummerStriker said:
4% real on average, compared to 1% real for RE, but that's the hundred year average. Maybe we get a president who guts the stock market, or a local government becomes a sanctuary city and puts a halfway house next door to you, or the communists make you rent a room for free, or the stock market goes to zero, or maybe the stock market is flat for 30 years because it is so overvalued but anti-immigration laws makes new housing construction unaffordable so existing home owners outperform the stock market by 5© a year.

Who knows. The future could be anything.
Click to expand...
Well that s highly unlikely on house prices. And i am not suggesting the stock market as a safe investment. Money deposits is what i meant.
 
New video explains why investors should expect stock returns closer to 5% or lower, rather than 10%.

 
val_lixembeau said:
No, that was a complete braino on my part, I don't know what I was thinking when I wrote that. It only feels like 50% haha.

My real rate is in the high thirties. I used to live in Hong Kong though where my marginal rate was something like 16%, sigh.
Click to expand...

Just did taxes last night, and it turns out my marginal rate is 44% and my partner's is 43% and we aren't even high earners. Sadly this is what happens when you make most of your money through salary, which is easy to tax grrrr
 
Any time you have extra money make a payment on the principle.
 
I'm 47 and we paid our house off about 10 years ago, best thing we ever did. It was $800 per month less we were liable for. We put that into savings every month afterward, then into higher rate CDs, just in case we needed to cash out for an emergencies. Safe to say that $800 per month plus a little interest over the years has given us a nice little additional savings and now we're moving some of that over to investments more likely to gain significant value . Granted, the first year we were a little nervous if something terrible happened and we needed a large amount of liquidity but after that it was all gravy. It also helped we bought a much less expensive house than we could afford. We could have afforded to be paying a $1500 per month mortgage but the house was big enough and nice enough for our purposes. Turned out good that we did because we ended up unexpectedly having to replace the HVAC system and the roof shortly after we bought it.
 
What stupid advice, this is the Mayberry...... Coke and Hookers...... You've got 120k, think of all the glorious memories you could create...........
 
Blunderbuss said:
I am Canadian, so maybe that is what is differing from a few comments I've seen in this thread.
Click to expand...

It is not really due to being Canadian, it is just the typical people talking out of their buttholes, because it is not possible to offer any reasonable advice without further information.

Your loan sounds like what in the US we call a 5/5 ARM with prepayment penalties, meaning the interest rate is fixed for 5 years at a time and is readjusted after each 5 year period and the prepayment fees to really make it financially prohibitive to not get screwed by higher interest rate adjustments.

Those type of loans in the US typically have per period and lifetime limits on interest rate increases so the biggest question to you is does your loan have limits? If it is limited to something like 2 or 3% then you are probably better off holding on to your money. If there are no limits and you are looking at an increase more in the 5%+ range then it probably makes sense to utilize some of that savings to pay it down.
 
subtlySteve said:
I would consult with a financial advisor instead of taking advice from a bunch of knuckleheads on an MMA forum.
Click to expand...
<PlusJuan> This all day.


Rules vary from location to location, company to company.

Talk to someone that knows the rules for your loan and your country/state/county,

I was able to set up a payment plan where we were paced as a 20 year payment but only paying the interest of a 30 yr, as the rule was that anything paid above the minimum payment was considered "premium only" . Helped us build a LOT more equity and trade up to a bigger house in a better town with a garage apartment grandfathered in legally (extremely rare where I live)

We pay ABOUT the same for our current house, zestimate 1.2m as we did for our second home which we bought and sold at 500k

Can be a great move. Do your homework first or talk to a finance person that can do it for you.
 
val_lixembeau said:
In Canada, mortgages are only for a few years at a time. So every five years or so (or whatever the term was) borrowers end up with a new interest rate even for "fixed-rate" mortgages.
Click to expand...

But can you pay it all off at that 5 year mark, or are stuck by the 15% rule?
 
HeffDoesWant said:
But can you pay it all off at that 5 year mark, or are stuck by the 15% rule?
Click to expand...
Yes you can pay it all off at once at the end if you want (since it is the end of the mortgage term), but what people typically do is either "renew" meaning stay with the same lender to borrow the remaining balance, amortized over the original term minus the times that has gone by so far, or else do the same with a new lender (possibly slightly better interest rate).
 
You must log in or register to reply here.

Latest posts

Forum statistics

Threads
1,237,846
Messages
55,521,180
Members
174,808
Latest member
luciusaugustus

Share this page

Back
Top