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mortgages are the biggest scam (compounded interest)
08-25-2016, 07:28 AM
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#1
- pushlimits
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mortgages are the biggest scam (compounded interest)
just had our mortgage statement through.
our current interest rate is around 3%.
over half of what we pay every month is actually interest. so if we paid around 10,000 towards our mortgage this year, only around 4,000 actually comes off the mortgage. the rest is interest.
most people look at the interest rate and think that seems low.
if you buy a house for say 250,000 - you'll probably end up paying back well over half a million by the end of the mortgage and that's assuming the interest rates stay 'low'. it could be closer to 1million if rates go up.
our current interest rate is around 3%.
over half of what we pay every month is actually interest. so if we paid around 10,000 towards our mortgage this year, only around 4,000 actually comes off the mortgage. the rest is interest.
most people look at the interest rate and think that seems low.
if you buy a house for say 250,000 - you'll probably end up paying back well over half a million by the end of the mortgage and that's assuming the interest rates stay 'low'. it could be closer to 1million if rates go up.
08-25-2016, 07:32 AM
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#2
- FriendOfFrank
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Buy your house outright in cash, if you hate mortgages so much. They're a necessary evil for most people unfortunately.
08-25-2016, 07:34 AM
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#3
08-25-2016, 07:35 AM
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#4
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Originally Posted By FriendOfFrank⏩
very few people can do that. it's crazy how much interest you end up paying back which on the face of it, looks like a small amount but is actually ridiculously large - many times the value of your house.Buy your house outright in cash, if you hate mortgages so much. They're a necessary evil for most people unfortunately.
08-25-2016, 07:35 AM
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lol...not too sure what OP is expecting?
08-25-2016, 07:36 AM
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#6
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Originally Posted By CoolKnees⏩
no chit sherlock - it's the way compounding works. as i say, most people would think on the face of it, a small percentage (say 2 or 3%) can't be adding too much - but it's quite staggering what you end up paying back.It's not a scam.
Interest is the price of loaning money. Just lol if you think anybody is willing to front you $250,000 for nothing.
Interest is the price of loaning money. Just lol if you think anybody is willing to front you $250,000 for nothing.
08-25-2016, 07:37 AM
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08-25-2016, 07:37 AM
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You do understand the interest vs principal payment adjusts to your mortgage amount?
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08-25-2016, 07:38 AM
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Again, you expect someone to loan you 250,000 and not get something in return? For 30 years on average? LOL. Put 10,000 in a savings account that follows the S&P 500 for 30 years and see how much you've got. It all is the same.
If you think mortgages are a scam, how about rent? Just go live in a box I guess?
If you think mortgages are a scam, how about rent? Just go live in a box I guess?
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08-25-2016, 07:40 AM
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you're right, they should loan everybody money for free.
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08-25-2016, 07:41 AM
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OP...really?
So you think a bank should give you a 3%, flat loan?
If the bank takes that 3% and amortizes it the other way, over the course of the loan, they're making tenths of a percentage in interest every year. Why on earth would a business (which is what banks are) do that? They'd all just go out of business and become investing firms and earn significantly more.
You're expecting banks to just give you a loan with super low interest because...?
So you think a bank should give you a 3%, flat loan?
If the bank takes that 3% and amortizes it the other way, over the course of the loan, they're making tenths of a percentage in interest every year. Why on earth would a business (which is what banks are) do that? They'd all just go out of business and become investing firms and earn significantly more.
You're expecting banks to just give you a loan with super low interest because...?
08-25-2016, 07:42 AM
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#12
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Originally Posted By pushlimits⏩
It's because you're still in the early part of your repayment. As you pay over time, the percentage of your payment that is going towards principal vs interest increases until year 30 or whenever when it's all the way paid off. You do have the option of paying more towards your principal every year or even every statement, and that can shorten the life of your loan. I'm pretty sure it's something like one extra payment a year can shorten a 30 year to a 23 year. Did you not pay attention when they explained everything to you?just had our mortgage statement through.
our current interest rate is around 3%.
over half of what we pay every month is actually interest. so if we paid around 10,000 towards our mortgage this year, only around 4,000 actually comes off the mortgage. the rest is interest.
most people look at the interest rate and think that seems low.
if you buy a house for say 250,000 - you'll probably end up paying back well over half a million by the end of the mortgage and that's assuming the interest rates stay 'low'. it could be closer to 1million if rates go up.
our current interest rate is around 3%.
over half of what we pay every month is actually interest. so if we paid around 10,000 towards our mortgage this year, only around 4,000 actually comes off the mortgage. the rest is interest.
most people look at the interest rate and think that seems low.
if you buy a house for say 250,000 - you'll probably end up paying back well over half a million by the end of the mortgage and that's assuming the interest rates stay 'low'. it could be closer to 1million if rates go up.
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08-25-2016, 07:42 AM
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#13
- pushlimits
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also when a bank buys the house for you, do they wire the house cost to the sellers bank? i am assuming they give the sellers bank an 'IOU' or they raise the money through the BoE/IMF or whatever. so the banks are earning the interest on you but it's not even their money they're earning interest on.
08-25-2016, 07:44 AM
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#14
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Interest is the price of handing you money today and getting them back later and also some assessment of risk of you not returning the money. Lmao at 3% what are you? A tradie?
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08-25-2016, 07:46 AM
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Originally Posted By Benihanas⏩
yeah we can make over-payments. it's up for renewal so i am going to aim to increase my mortgage repayments anyway. not sure if there will be a difference between making over-payments on our current plan (or one like it) or just decreasing the term. i'm not sure what will be best - will ask my mortgage advisor.It's because you're still in the early part of your repayment. As you pay over time, the percentage of your payment that is going towards principal vs interest increases until year 30 or whenever when it's all the way paid off. You do have the option of paying more towards your principal every year or even every statement, and that can shorten the life of your loan. I'm pretty sure it's something like one extra payment a year can shorten a 30 year to a 23 year. Did you not pay attention when they explained everything to you?
08-25-2016, 07:46 AM
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#16
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Originally Posted By Peasantfighter⏩
Actually with rates dropping below zero in some parts of Europe, you will see some people make money on taking loans.you're right, they should loan everybody money for free.
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08-25-2016, 07:48 AM
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Isn't interest usually front loaded on a mortgage? I know on my car loan its calculated how much interest you pay over the life of the loan and the first year I paid more in interest, 3 years later most of my payment goes right to principal. Same situation on my bike loan come to think of it.
08-25-2016, 07:49 AM
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You mad I waited until interest rates on mortgages are 1.9%...4 years fixed rate...still gonna kill me though
08-25-2016, 07:50 AM
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Originally Posted By xxdef1antxx⏩
Yes. Amortization schedule.Isn't interest usually front loaded on a mortgage? I know on my car loan its calculated how much interest you pay over the life of the loan and the first year I paid more in interest, 3 years later most of my payment goes right to principal. Same situation on my bike loan come to think of it.
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08-25-2016, 07:51 AM
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Originally Posted By demfeelsbro⏩
well ours is up now, so will shop for the best - also if we want to move, probably not best to lock in at a long term rate as it could be expensive to get out of the mortgage to buy another place.You mad I waited until interest rates on mortgages are 1.9%...4 years fixed rate...still gonna kill me though
08-25-2016, 07:54 AM
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Originally Posted By twovalvekid⏩
cheers whoever mentioned amortisation - never really looked into it. just had a quick look at an online mortgage calculator broken down into amortisation schedules.Yes. Amortization schedule.
makes more sense i guess.
08-25-2016, 07:54 AM
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Finance not even once......
Make an amortization schedule for your mortgage and look at the interest portion of your payment in the first year vs the interest portion in the last year. As time goes on and you move through the years interest continues to become less of your payment as principal becomes more.
Want to save more money with mortgages? Live below your means, buy less house than you can afford comfortable and pay that chit down quickly.
Other than that, shut-up and get back in line sheep.
Edit: Fukkin Gandolf up here with the amortization chit.
Make an amortization schedule for your mortgage and look at the interest portion of your payment in the first year vs the interest portion in the last year. As time goes on and you move through the years interest continues to become less of your payment as principal becomes more.
Want to save more money with mortgages? Live below your means, buy less house than you can afford comfortable and pay that chit down quickly.
Other than that, shut-up and get back in line sheep.
Edit: Fukkin Gandolf up here with the amortization chit.
08-25-2016, 07:56 AM
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#23
Originally Posted By pushlimits⏩
mortgages are at an all time low. long term they are generally only going up from here. why would you not lock in today's rates? what do you mean expensive to "get out of the mortgage"?well ours is up now, so will shop for the best - also if we want to move, probably not best to lock in at a long term rate as it could be expensive to get out of the mortgage to buy another place.
08-25-2016, 07:56 AM
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#24
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Originally Posted By pushlimits⏩
Fking first world winers!just had our mortgage statement through.
our current interest rate is around 3%.
over half of what we pay every month is actually interest. so if we paid around 10,000 towards our mortgage this year, only around 4,000 actually comes off the mortgage. the rest is interest.
most people look at the interest rate and think that seems low.
if you buy a house for say 250,000 - you'll probably end up paying back well over half a million by the end of the mortgage and that's assuming the interest rates stay 'low'. it could be closer to 1million if rates go up.
our current interest rate is around 3%.
over half of what we pay every month is actually interest. so if we paid around 10,000 towards our mortgage this year, only around 4,000 actually comes off the mortgage. the rest is interest.
most people look at the interest rate and think that seems low.
if you buy a house for say 250,000 - you'll probably end up paying back well over half a million by the end of the mortgage and that's assuming the interest rates stay 'low'. it could be closer to 1million if rates go up.
Our interest rate is 11-12% lol
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08-25-2016, 08:01 AM
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#25
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Originally Posted By bsmit107⏩
Finance not even once......
Make an amortization schedule for your mortgage and look at the interest portion of your payment in the first year vs the interest portion in the last year. As time goes on and you move through the years interest continues to become less of your payment as principal becomes more.
Want to save more money with mortgages? Live below your means, buy less house than you can afford comfortable and pay that chit down quickly.
Other than that, shut-up and get back in line sheep.
Edit: Fukkin Gandolf up here with the amortization chit.
Make an amortization schedule for your mortgage and look at the interest portion of your payment in the first year vs the interest portion in the last year. As time goes on and you move through the years interest continues to become less of your payment as principal becomes more.
Want to save more money with mortgages? Live below your means, buy less house than you can afford comfortable and pay that chit down quickly.
Other than that, shut-up and get back in line sheep.
Edit: Fukkin Gandolf up here with the amortization chit.
Does it suck and seem like a scam op? Maybe. You could argue yes and no, but if you don't like it, continue to throw your money away with renting. You want to talk about getting phucked by the man...
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08-25-2016, 08:02 AM
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08-25-2016, 08:05 AM
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#27
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in b4 traddies say buy everything in cash
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08-25-2016, 08:06 AM
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#28
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Originally Posted By CoolKnees⏩
Right this. Those people that work in banks can not work for free either. It exist non interest loan for muslims. I know a huge investor from downtown Minneapolis of Egiptian heritage that buy buildings with Saudi Arabia (terrorist) money interest free.It's not a scam.
Interest is the price of loaning money. Just lol if you think anybody is willing to front you $250,000 for nothing.
Interest is the price of loaning money. Just lol if you think anybody is willing to front you $250,000 for nothing.
08-25-2016, 08:07 AM
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My father gets a tax dectable for paying morgage.
08-25-2016, 08:07 AM
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#30
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