Help needed in Saving Mortgage Interest
Hello,
I'm new here but have been a long time lurker. I'm looking to purchase a property for around 1 million with 20% down payment. I currently own another property worth around 500K that I plan to sell. I can put in about 250K proceeds from the sale.
However, the sale and purchase will likely not line up so I won't have the extra cash for down payment until after I close on the new property. I plan to use the proceeds of my current property to lower my borrowing costs of the new property. So I'm thinking of the following scenarios to lower my interest costs and would like some advice in which option is the best, or if there's a better option I didn't think of.
1. Purchase new property on 20% down and do a 5 yr fixed as the rate is lower. Do pre-payments after sale of first property. Interest paid over 5 years is higher but overall interest for the amortization will be lower at the end of the amortization.
2. Purchase new property on 20% down and do a 1 yr fixed. After sale of property, refinance and put in more principle to lower monthly payments and interest costs for the remaining 4 yrs when compared to option 1.
3. Purchase new property on 20% down and do an open variable mortgage until sale of property and then lock it down for 5 years.
I feel Option 2 is the best way to go. But would love to hear your thoughts.
I'm new here but have been a long time lurker. I'm looking to purchase a property for around 1 million with 20% down payment. I currently own another property worth around 500K that I plan to sell. I can put in about 250K proceeds from the sale.
However, the sale and purchase will likely not line up so I won't have the extra cash for down payment until after I close on the new property. I plan to use the proceeds of my current property to lower my borrowing costs of the new property. So I'm thinking of the following scenarios to lower my interest costs and would like some advice in which option is the best, or if there's a better option I didn't think of.
1. Purchase new property on 20% down and do a 5 yr fixed as the rate is lower. Do pre-payments after sale of first property. Interest paid over 5 years is higher but overall interest for the amortization will be lower at the end of the amortization.
2. Purchase new property on 20% down and do a 1 yr fixed. After sale of property, refinance and put in more principle to lower monthly payments and interest costs for the remaining 4 yrs when compared to option 1.
3. Purchase new property on 20% down and do an open variable mortgage until sale of property and then lock it down for 5 years.
I feel Option 2 is the best way to go. But would love to hear your thoughts.
