Real Estate

L4 Advice - fees for additional Mortgagepayments

  • Last Updated:
  • Aug 11th, 2021 3:55 pm
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[OP]
Newbie
Dec 25, 2013
18 posts
2 upvotes

L4 Advice - fees for additional Mortgagepayments

Hello all
Looking for some bank / mortgage expert who may be able to provide me a ~ $ valve on the cost of putting additional monies against my mortgage. Currently I have 3 options to contribute to my mortgage. They are
1. 10% increase – will do
2. Monthly double payment – will do
3. Lump sum,

Now what I want to know is, what would the cost be and most cost effective

1. Pay mortgage, double down and an extra 2/3 k per month
2. Or contribute 10 k extra per quarter

Additional the extra monies would come from
1. LOC investment which pay monthly dividends and tax refund - borrow to invest
2. My after tax income which prefer not to do

TIA
2 replies
Deal Addict
Jun 26, 2019
1993 posts
1723 upvotes
GTA
So first of all, before delving into all of this, I think you need to read your fine print.

Most mortgages the lump sum is limited to usually either 10% or 20% of the total mortgage amount, and only one payment can be made annually. I'm just assuming this is the kind of mortgage you have due to your 3 accelerated payment options. So you're 2/3k per month extra, of $10k per Q might not even be allowed.

From a what is most cost effective stand point, I assume you're just referring to what saves the most interest, in which case the lump sum pays the fastest so therefore it would be the best. This said, I'm pretty sure most lenders have systems set up, I know mine does, to let you skip payments in the future for how much you've doubled up in the past. Sometimes this does not apply to lump sum. Therefore, if this was the case, doubling up is better as it would allow you to recapture some cash flow in the future should you need it.

Where the money comes from is up to you, really any post tax money is just post tax money, so not sure why it matters if it comes from your investment income vs your personal income, its all the same cash flow in the end.

Also, I'm sure lots of people are going to bring up the fact that mortgage rates are 1%, etc etc, can make more money elsewhere, etc etc, mortgages are cheap, etc etc. And they aren't wrong.....
[OP]
Newbie
Dec 25, 2013
18 posts
2 upvotes
Thank you for your post ,
My rational is that by paying off my mortgage i could then use the collateral to assist with my kids purchase.

first off, yes i can do a 10% lump sum, and there would be cost associated with additional payments.
And again taking that 2/3 K and investing at a greater return would generate income, but not sure if that would provide me the option of helping my kid,

I owe 50 % of my house and have RSP & TSFA etc. But I want to pay it off faster , hence the question at the additional cost/ penalty i would have to pay.

I have no intention of skipping payments with double down and 10% increase, that would enable my payments to b ~ 2500.00 a month , now we double that pay the additional cost and that would be 4-5k a month.
cost of the additional 2/3 is what I'm looking for. that would enable a 220k mortgage to be paid in like 5 yrs,

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