50 year ammortization
- Thread starter TroyK
- Start date
- Joined
- Aug 30, 2007
- Messages
- 1,821
A mortgage of $250,000 with an interest rate of 5.25% and an ammortization of 40 years requires a monthly payment of $1,237.70
At 50 years the payment is $1,169.62
So the savings would be $68.08 per month
Of course it depends on what your goals are as to how well this might work for you if it were available.
At 50 years the payment is $1,169.62
So the savings would be $68.08 per month
Of course it depends on what your goals are as to how well this might work for you if it were available.
- Joined
- Sep 11, 2007
- Messages
- 462
QUOTE (TroyK @ Feb 27 2008, 08:31 PM) Friend of mine was talking to his bank and they told him that a 50 year ammortization mortgages with be available in the summer. Has anyone heard anything about this. Might make the difference between a property cashflowing or not.
Troy
We are still waiting for some of the conventional lenders to get on board with 40 year amoritizations for rentals, so if we do see anything over that it will probably only be offered by subprime lenders. You`d still be far better off with a 40 from a conventional lender at fully discounted rates, than a 50 from a subprime lender at a much higher rate as your payments would probably be pretty much the same.
Troy
We are still waiting for some of the conventional lenders to get on board with 40 year amoritizations for rentals, so if we do see anything over that it will probably only be offered by subprime lenders. You`d still be far better off with a 40 from a conventional lender at fully discounted rates, than a 50 from a subprime lender at a much higher rate as your payments would probably be pretty much the same.
QUOTE (CanadianMortgageTeam @ Feb 28 2008, 12:14 AM) We are still waiting for some of the conventional lenders to get on board with 40 year amoritizations for rentals, so if we do see anything over that it will probably only be offered by subprime lenders. You`d still be far better off with a 40 from a conventional lender at fully discounted rates, than a 50 from a subprime lender at a much higher rate as your payments would probably be pretty much the same.
This is why I need a good mortgage broker. I still have much to learn. I guess that`s why I`m here to learn.
Peter, thanks for the reply. I notice that you are from BC. Can you recommend a good broker that works with investors in Kelowna.
This is why I need a good mortgage broker. I still have much to learn. I guess that`s why I`m here to learn.
Peter, thanks for the reply. I notice that you are from BC. Can you recommend a good broker that works with investors in Kelowna.
- Joined
- Sep 11, 2007
- Messages
- 462
QUOTE (TroyK @ Feb 28 2008, 01:39 AM) This is why I need a good mortgage broker. I still have much to learn. I guess that`s why I`m here to learn.
Peter, thanks for the reply. I notice that you are from BC. Can you recommend a good broker that works with investors in Kelowna.
Most brokers are licensed across the province - and some all over the country. Make sure that you choose your broker based on skills and expertise not location.
Peter, thanks for the reply. I notice that you are from BC. Can you recommend a good broker that works with investors in Kelowna.
Most brokers are licensed across the province - and some all over the country. Make sure that you choose your broker based on skills and expertise not location.
As you can see from garthchapman`s response, the longer the amortization gets, the less benefit you get in cash flow - the amount of interest you pay increases dramatically, and the amount of added cashflow (because of lower mortgage payments) decreases considerably.
So it depends on how much cash flow you require/desire. But using garth`s example, I would say if you really need that $68 more per month for the deal to be a good deal, walk away and find another property.
I have used the 40 year amortization rather than the traditional 25 on my most recent properties, and it has helped get the properties cash flow quickly. What bugs me is looking at the amortization schedules side by side. The amount of interest paid on the 40-year is dramatically increased! And the amount of equity you put on the property in the first five years is dramatically decreased.
Anyway... also: a good mortgage broker is one of the best things to happen to me a few years ago! You need to find one as soon as possible. Running from local branch to local branch to find a loan gets old very quickly.
So it depends on how much cash flow you require/desire. But using garth`s example, I would say if you really need that $68 more per month for the deal to be a good deal, walk away and find another property.
I have used the 40 year amortization rather than the traditional 25 on my most recent properties, and it has helped get the properties cash flow quickly. What bugs me is looking at the amortization schedules side by side. The amount of interest paid on the 40-year is dramatically increased! And the amount of equity you put on the property in the first five years is dramatically decreased.
Anyway... also: a good mortgage broker is one of the best things to happen to me a few years ago! You need to find one as soon as possible. Running from local branch to local branch to find a loan gets old very quickly.
- Joined
- Aug 30, 2007
- Messages
- 13,879
50 year amortization is like a INTEREST ONLY mortgage, or a line-of-credit (LOC)
why not .. if you are sure that there is equity upside ..
paying down the mortgage is like saving money at 5% .. usually you can do better with real estate so the mortgage paydown has little value to a serious real estate investor .. and benefits primarily teh bank as it reduces their risk !
Also have a look at this post:
http://myreinspace.com/public_forums/Real_Estate_Discussion/62-2302-What_is_better_a_mortgage_or_a_line-of-credit_.html
why not .. if you are sure that there is equity upside ..
paying down the mortgage is like saving money at 5% .. usually you can do better with real estate so the mortgage paydown has little value to a serious real estate investor .. and benefits primarily teh bank as it reduces their risk !
Also have a look at this post:
http://myreinspace.com/public_forums/Real_Estate_Discussion/62-2302-What_is_better_a_mortgage_or_a_line-of-credit_.html
QUOTE (thomasbeyer2000 @ Mar 1 2008, 11:09 AM)
50 year amortization is like a INTEREST ONLY mortgage, or a line-of-credit (LOC)
why not .. if you are sure that there is equity upside ..
paying down the mortgage is like saving money at 5% .. usually you can do better with real estate so the mortgage paydown has little value to a serious real estate investor .. and benefits primarily teh bank as it reduces their risk !
Also have a look at this post:
http://myreinspace.com/public_forums/Real_Estate_Discussion/62-2302-What_is_better_a_mortgage_or_a_line-of-credit_.html
Hello Thomas,
Thank you for the link to the post, as well as other post you have written. I think, I speak for all newbies, when I say we appreciate the time and knowledge of you and other investors on this site.
Troy
50 year amortization is like a INTEREST ONLY mortgage, or a line-of-credit (LOC)
why not .. if you are sure that there is equity upside ..
paying down the mortgage is like saving money at 5% .. usually you can do better with real estate so the mortgage paydown has little value to a serious real estate investor .. and benefits primarily teh bank as it reduces their risk !
Also have a look at this post:
http://myreinspace.com/public_forums/Real_Estate_Discussion/62-2302-What_is_better_a_mortgage_or_a_line-of-credit_.html
Hello Thomas,
Thank you for the link to the post, as well as other post you have written. I think, I speak for all newbies, when I say we appreciate the time and knowledge of you and other investors on this site.
Troy
- Joined
- Mar 11, 2008
- Messages
- 253
What happened to the 50-year amortization mortgage that was offered by `Reliant Home Warranty Corp.`, back in 2006?