4.63% fixed 5 year or 3.55% variable

[dxkj]

Originally posted by: Kenazo

Originally posted by: Skoorb

Originally posted by: Kenazo
I ended up doing the 3.55%, w/ weekly payments. Interestingly by doing weekly payments instead of monthly you save about $50/mth on a $120k mortgage @ 3.55%

You can do the same by making a monthly payment and just paying an extra 10% or so.

12 X $1000 = $12k/year
52 X $250 = $13k/year

12 X $1100 = $13.2k/year

No, that's the wrong formula. What's happening is that since we'll be paying every week we end up not paying a full month's interest on 3 of the 4 weekly paments. It's because of a decrease in interest expense that we'll be paying $50 less per month on our mortgage, not b/c we're making less or more payments.

Of course we'd be foolish to not take that $50/mth we're saving and not putting it towards principal, but it's good to have the option of the extra cash flow, if we need it.






Oh, and our 3.55 variable is actually Bank of Canada prime less 0.7%, so unless BoC prime goes up to 5.33%, I'm satill at a lower interest rate this way than fixed. Even if it stays down for 2 of my 5 year term, and then creeps above 6%, I'm still better off variable.

Most banks in the US probably wont let you pay weekly, but I still have trouble seeing how 600 dollars or whatever * 3.55% interested for one month = 50 savings in interest

 

[sandorski]

Originally posted by: dxkj

Originally posted by: Kenazo

Originally posted by: Skoorb

Originally posted by: Kenazo
I ended up doing the 3.55%, w/ weekly payments. Interestingly by doing weekly payments instead of monthly you save about $50/mth on a $120k mortgage @ 3.55%

You can do the same by making a monthly payment and just paying an extra 10% or so.

12 X $1000 = $12k/year
52 X $250 = $13k/year

12 X $1100 = $13.2k/year

No, that's the wrong formula. What's happening is that since we'll be paying every week we end up not paying a full month's interest on 3 of the 4 weekly paments. It's because of a decrease in interest expense that we'll be paying $50 less per month on our mortgage, not b/c we're making less or more payments.

Of course we'd be foolish to not take that $50/mth we're saving and not putting it towards principal, but it's good to have the option of the extra cash flow, if we need it.






Oh, and our 3.55 variable is actually Bank of Canada prime less 0.7%, so unless BoC prime goes up to 5.33%, I'm satill at a lower interest rate this way than fixed. Even if it stays down for 2 of my 5 year term, and then creeps above 6%, I'm still better off variable.

Most banks in the US probably wont let you pay weekly, but I still have trouble seeing how 600 dollars or whatever * 3.55% interested for one month = 50 savings in interest

Probably over the duration of the Mortgage.