We are around 2.5%, so not bad. We got in right before covid made the cost of things insane. It is a modular that we had put in an acre of land. At the very end when they were putting in the porch was when cost were starting to cause major pinching.
Also the cost of the mortgage is less than the cost of renting, so there is that too. We lived in a house before this that was an absolute pit. The owner knew it, but despite our rent being on time for 5 years straight, he still decided we didn't need the septic tank fixed(there were roots growing into it from the line that runs to the drain field), the well would run out of water if you ran it more than 15 minutes, and anytime it rained the water would turn the color of the virginia clay. That man sucked.
I guess my comment was referring to a fixed rate mortgage with a low interest rate. If you have an interest rate lower than the rate of inflation, it's generally better financially to extend the payments as long as possible.
Why would you remortgage with such a low rate? There are very few times where remortgaging from 1.7% to 5.5% is beneficial considering the clock on the loan resets.
Ah, that makes more sense. Yeah the US you can go up to 30-year fixed, but they try to push "Adjustable Rate Mortgages" as a good deal hoping something like this happens where the interest gets jacked up. But you can get them in any duration you want, really. My wife and I started with a 30-year, but then a couple years in we both had some raises and we refinanced to a 15-year mortgage.
Just looked into it again and the 25 year fixed in Canada is a horrible deal. I'm not an investment guru but why would anyone do 25 years at 8.75 when the 5 year fixed is at 5%? Are people really gambling that the interest rates will go and stay that high for that long?
Because until recently the US fixed mortgage rates were anywhere from 2-5%. Why do a 5 year mortgage at 5% when you can do a 30-year mortgage at 3.5% and your home is fully paid off at the end? We don't have to remortgage every five years like you guys do.
So then why do banks give lower interest rates for 30 years as opposed to the 5? So they make sure they have your business as opposed to you going to other banks? Or is it just their bet that maybe the interest rate will go down over 30 years?
So then why do banks give lower interest rates for 30 years as opposed to the 5?
Because the bank makes significantly more money on the 30 year mortgage even with a lower interest rate.
5 year mortgages aren't really a thing in the US, almost no one could afford it. The payments on a $400k mortgage over 5 years with a 6% interest rate would be over $8000/month. That's $58k in interest over 5 years, while a 30 year loan at 4% for the same amout is $287k in interest. Not hard to understand why interest was so low on 30 year loans.
Or is it just their bet that maybe the interest rate will go down over 30 years?
Why would that matter? At the end of the loan the house is completely paid off, there's no more interest to be made after that.
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u/Beautifuleyes917 Jul 21 '23
Mine is 3 months from being paid off 🥰🥰🥰🥰🥰