Posted on: 02nd Nov, 2010 12:13 pm
My situation:
House value $382,000
Mortgage balance $285000.
30 year Fix rate 4.875%.
28 years left to pay.
$1550 of monthly payment.
Planning to move in 5 years and buy another house with my girlfriend within the next 10 years.
I'm looking to borrow $100,000 at 2.99% for 5 years with the possibility to renew the loan at the market rate for $800.
My idea is to pay off at least 60,000 by the term of this second loan. In case the rate are excessively high I should have the possibility to pay off the remaining 40k with my emergency fund account.
As a result I should end up with:
[$1550 (1st mortgage required payment)] + [$400 (2nd mortgage required payment)] + [between $700 ~ $1400 (extra payment to pay off at least 60k of 2nd mortgage)] = between $2650 ~ $3350 for 5 years.
Followed by [$1550 (min)] for 9 more years. Or [$2650] for 5 years. Or [$3350] for 3 years
Potentially deb-free in 8~10 years instead of 30 with financial flexibility (= without having high monthly payment required). In case I lose my job or something happens.
Is that a good idea?? or is there anything I missed?
Thank you.
House value $382,000
Mortgage balance $285000.
30 year Fix rate 4.875%.
28 years left to pay.
$1550 of monthly payment.
Planning to move in 5 years and buy another house with my girlfriend within the next 10 years.
I'm looking to borrow $100,000 at 2.99% for 5 years with the possibility to renew the loan at the market rate for $800.
My idea is to pay off at least 60,000 by the term of this second loan. In case the rate are excessively high I should have the possibility to pay off the remaining 40k with my emergency fund account.
As a result I should end up with:
[$1550 (1st mortgage required payment)] + [$400 (2nd mortgage required payment)] + [between $700 ~ $1400 (extra payment to pay off at least 60k of 2nd mortgage)] = between $2650 ~ $3350 for 5 years.
Followed by [$1550 (min)] for 9 more years. Or [$2650] for 5 years. Or [$3350] for 3 years
Potentially deb-free in 8~10 years instead of 30 with financial flexibility (= without having high monthly payment required). In case I lose my job or something happens.
Is that a good idea?? or is there anything I missed?
Thank you.
hi franck,
you will be liable for 2 mortgages if you take out a second mortgage on your property. rather than taking out a second mortgage, you can refinance your mortgage and get a 15 year fixed rate mortgage. as you'll stay in the property for the next 5 years, you will be able to offset your closing costs.
take care.
you will be liable for 2 mortgages if you take out a second mortgage on your property. rather than taking out a second mortgage, you can refinance your mortgage and get a 15 year fixed rate mortgage. as you'll stay in the property for the next 5 years, you will be able to offset your closing costs.
take care.