On Sep 1, 5:18 pm, Mark Bole <ma...[at]pacbell.net> wrote:
- quote -

But be sure to choose a calculator tailored for your country. This is
especially important for Canadians, because the mortgage rate is said
to be "compounded semi-annually". What that means in practical terms
is: instead of computing the monthly interest rate as 5.74%/12, it is
(1 + 0.0574/2)^(1/6)-1 <cringe> , where "^" means "to the power of".

I don't know why Canadians bother with this complication. It makes a
relatively small difference. For the loan above, the monthly rate is
about 0.6 basis points (0.006%) less; the monthly payment is about $10
less; and if the loan goes to term, the total interest paid is about
$3100 (1.4%) less than about $226,700 in interest.


- quote -

For Canadians, the monthly payment would be about $1599, and the
balance after 5 years would be about $229,100 instead of $229,400.

PS: Canadians are the only ones that I know of that do not use
"usual" mortgage math (i.e. the periodic rate is the annual rate
divided by the number of periods per year). I have seen two different
methods used for UK mortgages -- the "usual" one, and one in which the
periodic payment is based on annual amortization divided by the number
of periods per year. I don't know how prevalent the latter is in the
UK.

On Sep 1, 2:29 pm, muybl...[at]hotmail.com wrote:
- quote -


You mean the worldwide credit crunch is not affecting Toronto real
estate prices? More power to you then.


- quote -


I am not Canadian, but I would think that that would depends on the
terms of your loan. Is there a prepayment penalty?


- quote -

On Sep 1, 6:09 pm, Mark Bole <ma...[at]pacbell.net> wrote:
- quote -

Thanks! I'll check with the bank about any surcharges.


======================================= MODERATOR'S COMMENT:
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muybluie[at]hotmail.com wrote:

- quote -

BTW, there are mortgage calculators aplenty on the Internet, or from the
places you are shopping. For the loan parameters you give above, your
monthly payment would normally be 1609 dollars.

After five years of these payments, your loan balance (approx. payoff
amount) would be 230,000, dollars give or take a few.

-Mark Bole

On Sep 1, 4:29 pm, muybl...[at]hotmail.com wrote:
- quote -

The easiest way to find out how much you need to pay off your mortgage
is to call the company that services it and ask for the payoff amount
for a certain date.

Dave

muybluie[at]hotmail.com wrote:

- quote -

Fine, as long as you understand what it means to speculate in real
estate... and the considerations for buy vs. rent. Search the archives
of this group to see plenty of other discussions on those topics.

- quote -

Unless there is something very different about Canadian mortgages,
interest is normally "pay as you go", in other words each monthly
payment includes the total amount of interest accrued during the month
on the principal balance. Therefore, to answer the question in your
subject line, in the month you pay off the mortgage you only pay
interest for those days of the month up to the day you paid it off. For
example, if you close the sale on April 15th, you would pay 15 day's
worth, or half a month's interest, as part of the the final payoff,
assuming all your prior monthly payments had been made as agreed.

Two additional items:

If your loan has "negative amortization", which means you are not paying
enough each month to cover accrued interest, and the remainder is being
added to the principal balance, then the above is still true. But the
principal balance you have to pay off might actually be bigger than the
amount you originally borrowed, or at least not much smaller, due to the
negative amortization.

Some loans include a pre-payment penalty, which I recommend you try to
avoid. This would require you paying a surcharge of some kind for the
privilege of paying the loan off early and depriving the bank of its
expected long term income stream.

-Mark Bole

Hi,

I am currently living in Canada, but I may move to a different country
in a few years. I am thinking of buying a home in order to capitalize
on the condo boom in Toronto. What happens if after, say, 5 years, I
sell my place and just take the money, without re-investing in another
home? I have to pay what's left of my principal, but what about the
interest? How is that calculated? In other words, how much will I
need to give in addition to the remaining principal.

If you feel like crunching the numbers for me (I have no idea how),
the mortgage is 256,000$, for 25 years, at 5.74%.

Thanks!