Negative interest rates ?

[TROLLCAT]

last round for the mortgage 4 years 11 months to go 1.89% rbc

 

[Cyle]

Our financial advisor has pushed hard on us not prepaying the mortgage and dumping those excess funds in to our investments. We have always made more in our Investorline account than we would have achieved pre-paying the mortgage at a sub-3% interest rate. Just a different perspective...

Yep as long as you aren't spending the money, it is better put anywhere else then paying down the mortgage. In fact if you are smart with investing, best thing you can do is get a HELOC that goes up for every dollar in principle paid down on mortgage, and basically turn your mortgage into interest only and use the money that would go to the principle to make you money.

 

[LennyR]

So many people are so focused on repaying a mortgage in their high earning years , while foregoing so many great investment opportunities that would benefit them far greater in the long term. This was especially true when returns on investments were high , so many people looked past high return investments to pay down their 2-3 even 4 percent mortgage . Each to his own , but making sacrifices , even small ones to get rid of a debt on your principle residence at 2 % , isn’t always the best long term choice.

 

[snopro]

I agree. If you owe money at higher interest rates pay those down first. Debt is debt but interest fluctuates.

 

[Frosty19]

So many people are so focused on repaying a mortgage in their high earning years , while foregoing so many great investment opportunities that would benefit them far greater in the long term. This was especially true when returns on investments were high , so many people looked past high return investments to pay down their 2-3 even 4 percent mortgage . Each to his own , but making sacrifices , even small ones to get rid of a debt on your principle residence at 2 % , isn’t always the best long term choice.

Mostly what I see are people looking into the rules of early repayment but not actually exercising the option (at least myself)
Theres nowhere else you'll be able to borrow money at sub 2% and true, much better off to take borrowed money at 2% and invest it in something that say gets 5% return.
Theres also lots of investments right now that are taking a hit with the market conditions so that is also something to look at

Edit: depending how cynical you are you could also look at paying off a much more expensive house now before the rates do rise again in the future

 

[snopro]

Mostly what I see are people looking into the rules of early repayment but not actually exercising the option (at least myself)
Theres nowhere else you'll be able to borrow money at sub 2% and true, much better off to take borrowed money at 2% and invest it in something that say gets 5% return.
Theres also lots of investments right now that are taking a hit with the market conditions so that is also something to look at

Edit: depending how cynical you are you could also look at paying off a much more expensive house now before the rates do rise again in the future

Exactly. Make your money work for you.

 

[Bogger]

Edit: depending how cynical you are you could also look at paying off a much more expensive house now before the rates do rise again in the future

This is where I'm at.... I have money invested and could likely earn a higher return by investing especially in a solid dividend paying stock.... BUT I still owe a lot of $$$ on my mortgage and I want to take advantage of the low interest rate to pay it down as fast as I can before rates reverse.... If I had any higher interest loans I would definitely look at paying them down first but luckily our mortgage and the wife's car at 0.9% is the only debt we are carrying.

Mortgage rates are low yes, but 2% on $500K is much higher than any return I'm going to get by shaving $500/mth off my mortgage payment for an investment fund. If I had $500K to dump into a dividend stock paying 6% then in theory I'd be 4% further ahead but I don't know where mortgage rates will be in 5 years so I want as much of my principal paid as I can prior to having to remortgage for the last time in Sept 2025....

 

[Bogger]

Then again maybe I'm off base and should speak with a financial planner

 

[Bnorth]

This is where I'm at.... I have money invested and could likely earn a higher return by investing especially in a solid dividend paying stock.... BUT I still owe a lot of $$$ on my mortgage and I want to take advantage of the low interest rate to pay it down as fast as I can before rates reverse.... If I had any higher interest loans I would definitely look at paying them down first but luckily our mortgage and the wife's car at 0.9% is the only debt we are carrying.

Mortgage rates are low yes, but 2% on $500K is much higher than any return I'm going to get by shaving $500/mth off my mortgage payment for an investment fund. If I had $500K to dump into a dividend stock paying 6% then in theory I'd be 4% further ahead but I don't know where mortgage rates will be in 5 years so I want as much of my principal paid as I can prior to having to remortgage for the last time in Sept 2025....

You can usually pay down 30%+ of the principal in any given year at the anniversary date. I would recommend maxing investments and then at renewal time if rates have risen look at liquidating investments to pay down the mortgage. Do it again the next year in high interest rates to really knock it out. Also if rates are rising then the Interest Rate Differential Penalty will actually be lower than it is now when rates are falling.

 

[pfi572]

What’s the interest on $500 k at 2-3% over 15 years ?!!
$200 k ? Lol
That $200k is tax paid money so now it’s $350k ish ?
Money made on investments sure isn’t tax free. You are paying to put it in , paying to take it out and paying capital gains on any increase with potential to lose it as well ?
These comments on money is cheap? True but look at what houses cost now ?
I think I will just keep living within my means and try not to be paying big Financial institutions interest of any kind .

 

[rsaruk]

My bank just offered me 1.74 for 4 years or 1.9 for 5. What do the experts think would be the better one. Worried if rates go up then I don't get that last year at a lower rate.

 

[snopro]

Longer is better

 

[snopro]

Especially with a Trudeau at the helm

 

[Pedaling pete]

Bank of Canada Key Interest rate 0.25%. How long until 0 or negative even?

https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/

 

[Dragonalain]

What’s the interest on $500 k at 2-3% over 15 years ?!!
$200 k ? Lol
That $200k is tax paid money so now it’s $350k ish ?
Money made on investments sure isn’t tax free. You are paying to put it in , paying to take it out and paying capital gains on any increase with potential to lose it as well ?
These comments on money is cheap? True but look at what houses cost now ?
I think I will just keep living within my means and try not to be paying big Financial institutions interest of any kind .

This is my thinking also. We bought a 550k home 5 years ago. It’s currently down to around 250k. I figured I would save over 200g on interest if I doubled my payments. That 200g is dang close to 350g before tax. When I’m mortgage free in my 30s I’ll still have plenty of time working time to boost up those investments. Interest maybe Low right now but interest on today’s housing cost is still a significant amount of money to give away.

 

[Caper11]

No the interest is not that high over that term.

 

[Cdnfireman]

Pay off your debts, particularly your mortgage.....as fast as you can without too many sacrifices elsewhere...the peace of mind being debt free is something you can’t put a price on. If things go to $hit, nobody can take it away from you....lots of so-called financial experts will give you advice about interest spreads and making your money work for you etc, etc, but once you’re debt free, you can do what you want sensibly without threatening your home. You won’t be the richest guy, but you’ll sleep better than the guy that’s chasing the dollar....

 

[The big greasy]

Pay off your debts, particularly your mortgage.....as fast as you can without too many sacrifices elsewhere...the peace of mind being debt free is something you can’t put a price on. If things go to $hit, nobody can take it away from you....lots of so-called financial experts will give you advice about interest spreads and making your money work for you etc, etc, but once you’re debt free, you can do what you want sensibly without threatening your home. You won’t be the richest guy, but you’ll sleep better than the guy that’s chasing the dollar....

Damm rights!, that's the old school way of thinking, but the best!. But in years to come you will pick up your neighbours debt because he had to have it all an could care less about his outrageous debt and now has fallen on hard times.. Poor guy... Also I think in years to come we will all be sharing inTrudeau's debt, we will be given a portion to pay. Because you know ...... We are all in this together.

 

[snopro]

Whatever happened to Dad's saying save money for a rainy day and then we get a government that props up all the slobs who never did that. Kinda setting a presedent that saving is overrated when the govt bails everyone out.

 

[Cyle]

Pay off your debts, particularly your mortgage.....as fast as you can without too many sacrifices elsewhere...the peace of mind being debt free is something you can’t put a price on. If things go to $hit, nobody can take it away from you....lots of so-called financial experts will give you advice about interest spreads and making your money work for you etc, etc, but once you’re debt free, you can do what you want sensibly without threatening your home. You won’t be the richest guy, but you’ll sleep better than the guy that’s chasing the dollar....

Yes and no, a happy medium will make you the most wealth and securely. I can't imagine buying a house, paying it off totally then investing. It's also good debt vs bad. I own 3 rentals all of which have mortgages, big difference between that good debt and buying tons of toys, vehicles, or risky stocks, etc. Unless you have a massive income, it'll take a long time to pay off that house and try to build any real wealth. Sure if you want to retire at 65 and be comfortable, it'll get you there. But many want to do a lot better then that.