tag:blogger.com,1999:blog-5691217606623125653.post3123008014008334854..comments2024-01-28T03:27:50.729-05:00Comments on Financial Health Blog: Mortgage vs HELOC: Compound vs Simple InterestHShttp://www.blogger.com/profile/16369103244673018143noreply@blogger.comBlogger22125tag:blogger.com,1999:blog-5691217606623125653.post-79488776524068624002018-08-09T01:01:39.703-04:002018-08-09T01:01:39.703-04:00What? No compounding mortgages? Sounds like a Dave...What? No compounding mortgages? Sounds like a Dave Ramsey rant. LOL Mortgages are compounded interest which is why they are front loaded, interest heavy (around 75 to 85% of your payment is interest, the crumbs left over pay down your home). How do you think you end up paying for a home for yourself and one for the bank? Anonymoushttps://www.blogger.com/profile/02986400773265503819noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-44769999453104933122018-04-25T19:55:27.098-04:002018-04-25T19:55:27.098-04:00Most lenders will provide a HELOC product to clien...Most lenders will provide a HELOC product to clients.<br /><br />But as mentioned in my post, during times of increasing interest rates (such as the current environment), locking in as opposed to going into a variable interest rate type product (such as a HELOC), may be a better option. Not always, but often that is the case. It also depends on personal financial situation, value of home, amount of mortgage left on the home, when you want to have the debt paid off by, how much flexibility you want, etc... <br /><br />It's always recommend to sit down with a knowledge Financial Advisor to go through all the details and numbers. Generally, I find most mortgage agents/brokers don't have the sufficient knowledge to give you all the information you require, and often have a severe bias for one side (i.e. mortgage) vs a HELOC.<br /><br />Hope this helped!HShttps://www.blogger.com/profile/16369103244673018143noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-91524034075670394602018-04-19T17:09:22.207-04:002018-04-19T17:09:22.207-04:00so which banks in Canada provide a HELOC?so which banks in Canada provide a HELOC?DSPhttps://www.blogger.com/profile/17361491231174067908noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-69076909698148594312017-05-12T10:33:22.398-04:002017-05-12T10:33:22.398-04:00The Manulife calculator is misleading because it a...The Manulife calculator is misleading because it assumes everything above your monthly expenseswill stay in the account thus reducing your balance. This is essentially making extra payment every month; of course you'll pay down the balance faster than a conventional mortgage. But, there are other things you can do with the extra that MIGHT be more advantageous eg: invest it in an RRSP in something that returns more than the mortgage interest rate. It won't let you compare apples to apples - that is just the cost of the interest over the life of the loan if no extra payments are put in. My hunch is that even if compound interest is more expensive, nothing I've read or found or been told has convinced me its worth the premium you pay to have a HELOC - up to .5%.Greghttps://www.blogger.com/profile/04591673544331984950noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-139756804791165272017-05-06T12:21:11.620-04:002017-05-06T12:21:11.620-04:00Hi Nathan, I am considering a home equity loan to...Hi Nathan, I am considering a home equity loan to refinance my house. so your post suggest you are saving money. would you suggest home equity to refinance vs. a mortgage. i got a fixed 400 % rate over 15 yrs. thanks! rhondaAnonymoushttps://www.blogger.com/profile/08044431374721530431noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-19765713730578170102017-04-13T11:08:36.221-04:002017-04-13T11:08:36.221-04:00Hi, and thank you for taking the time to read the ...Hi, and thank you for taking the time to read the article.<br /><br />There's only a few situations where the Interest on a HELOC is tax deductible. If you're using the funds from the HELOC to invest, and generate investment income (or have a reasonable expectation to generate income), then the interest becomes tax deductible. Also, if you use money from the HELOC to generate business income (for example you purchased equipment for your business), then the interest also becomes tax deductible. I'm not sure if a portion of the interest is tax deductible if you have a home office (like it is with a traditional mortgage), but that is something that you may want do some research on. It's always recommended to get the assistance of a qualified Tax Professional on these type of matters, as they would have more in depth knowledge.HShttps://www.blogger.com/profile/16369103244673018143noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-53267191032132964652017-04-13T10:54:45.094-04:002017-04-13T10:54:45.094-04:00Hi Gary, Thank you for taking the time to read the...Hi Gary, Thank you for taking the time to read the article and for your comments.<br /><br />Up to now I haven't found one that can accurately and transparently provide the comparison between the two and give the right numbers on the interest. However, the Manulife ONE calculator (you can just go to their website) does provide you with a good illustration and numbers. That may be one of the better ones I've seen.HShttps://www.blogger.com/profile/16369103244673018143noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-10033192483530920962017-04-06T21:02:54.255-04:002017-04-06T21:02:54.255-04:00Thanks for your article. Please can you share some...Thanks for your article. Please can you share some light on how some or all of the interest paid on HELOC can be deducted before tax. Regards, Joesubhrashttps://www.blogger.com/profile/14945382580108290650noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-55263001190686548212017-03-31T01:38:32.957-04:002017-03-31T01:38:32.957-04:00Thank you for the article! I'm still doing som...Thank you for the article! I'm still doing some searching, but are there any spreadsheets or models out there that calculate and compare total interest paid between a mortgage (fixed interest rate refinance; cash-out) loan vs a heloc (variable interest rate)?Gary Crawshawhttps://www.blogger.com/profile/01349662312921348131noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-2690113999082480942017-01-23T18:32:53.751-05:002017-01-23T18:32:53.751-05:00thanks for the background information. how does o...thanks for the background information. how does one go about comparing a heloc vs. semi-annual compounded mortgage? i'd like to know how to go about comparing because other sites say you shouldn't use a heloc for long term loans due to the interest fluctuations. thanksAnonymoushttps://www.blogger.com/profile/03068374220362570808noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-17105375561267822102016-10-14T14:48:15.200-04:002016-10-14T14:48:15.200-04:00Thank you for taking the time to read the article ...Thank you for taking the time to read the article and for your kind words. Yes, most people don't realize how much interest they actually pay over the life of their mortgage. In many cases, especially in big cities, you can pay 3 and sometimes 4 times the value of your house over the life of your mortgage. This is especially the case when people continuously dip into the equity of their home and end up extending the life of their mortgage.HShttps://www.blogger.com/profile/16369103244673018143noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-11545118411489739742016-10-07T15:53:04.427-04:002016-10-07T15:53:04.427-04:00Excellent article with wealth of info! Bank want P...Excellent article with wealth of info! Bank want People to focus on interest rate but you should really focus on interest Volume, the total sum of interest you pay for 30 year mortgage most of time you end up paying close to double of the amount you borrow. Anonymoushttps://www.blogger.com/profile/13839640350275728917noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-17250273791267348932016-08-02T23:30:26.159-04:002016-08-02T23:30:26.159-04:00Thank you for your kind words. I'm glad you we...Thank you for your kind words. I'm glad you were able to get some Value out of the article!HShttps://www.blogger.com/profile/16369103244673018143noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-243378460240011682016-07-30T14:27:32.090-04:002016-07-30T14:27:32.090-04:00Great simple to understand article. I am already ...Great simple to understand article. I am already aware of helocs and differences and am working towards using new strategies. For those who think mortgages are better, learn the math behind the repayment schedule and see the front end loaded interest coming out of your payment, compounding interest. Lower interest doesnt always mean lower interest payed. Thanks for the articleAnonymoushttps://www.blogger.com/profile/11390600793155274254noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-79930453725105631242016-06-21T10:53:23.169-04:002016-06-21T10:53:23.169-04:00Hi,
This is an excellent article. I have 3 HELOC...Hi,<br /><br />This is an excellent article. I have 3 HELOC accounts and I know how much savings I could make in interest Vs having mortgage. Those who complaint about HELOC do you proper math in interest calculations and you will see the difference.<br />The bank will never tell you the truth and I have been forced to take mortgages always. The banks are there to suck money from our pocket. <br /><br />Regards,<br />Nathan.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-28834407116948803072016-04-23T17:01:53.825-04:002016-04-23T17:01:53.825-04:00Your all "VS" are very nice and good com...Your all "VS" are very nice and good compare with each other. Nice effort and nice post i have read your whole post. <a href="http://mortgagebidder.ca/vancouver-mortgage-rates" rel="nofollow">mortgage rates Vancouver</a><br />Amelia Harrishttps://www.blogger.com/profile/05927342506924442564noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-45670218884553550312016-03-17T16:53:07.904-04:002016-03-17T16:53:07.904-04:00Hi Brian and 'Anonymous'.
Both of you are...Hi Brian and 'Anonymous'.<br /><br />Both of you are incorrect, in regards to the 'compounding' comments. Section 6 of the Interest Act requires that all fixed-rate mortgages being offered be quoted using only semi-annual or annual compounding periods. If you look at any lender's documents or even website, it is by law required for them to indicate the compounding on the rate - in almost all cases, the rates are compounded semi-annually. This means that a 6% mortgage rate will actually have an effective rate of 6.09%.HShttps://www.blogger.com/profile/16369103244673018143noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-65846315450365126012016-03-16T23:08:47.267-04:002016-03-16T23:08:47.267-04:00Brian is right, this post is nonsense.
There are n...Brian is right, this post is nonsense.<br />There are no compounding mortgages.<br /><br />HELOC will cost you a higher interest rate because of the flexibility it offers. Mortgages will be more restrictive with rules around paying faster, but there are still many ways to accelerate the payback (which will cost you less in the end.)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-82604454120864946732016-02-24T00:17:14.484-05:002016-02-24T00:17:14.484-05:00As a mortgage lender of 14 years, I wrote thousand...As a mortgage lender of 14 years, I wrote thousands of mortgages and even gave advice to clients to consolidate their HELOCs into a fixed rate mortgage. I have studied this for 4 years and have came to the conclusion that a HELOC is actually a better fit for most folks wanting to eliminate their debts faster. I have even ran models showing a HELOC increasing in interest rate by 0.5% each year and the client still paying their home off faster when they use their HELOC like a checking account instead of just another loan. Checking accounts are basically liabilities because the rate of return is 0% excluding inflation, meaning your money is actually moving backwards. So, why keep your money in a checking account doing nothing when you can dump 100% of your income into a HELOC and take draws when you need to pay your bills? This allows your money to work for you even when you are sleeping. Not to mention, they are tons of banks that will offer fixed rate HELOCs or HELOCs based on LIBOR which is now at 0.43% with a lifetime cap of 6%. This doesn't take much discipline as one would suggest. All it takes is for the consumer to abandon the idea of a checking account and use their HELOC as an operating account. The results are nothing short of amazing. Anonymoushttps://www.blogger.com/profile/07179432421622823495noreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-51497760055794452482015-11-15T17:42:08.566-05:002015-11-15T17:42:08.566-05:00While I applaud your efforts to investigate and wr...While I applaud your efforts to investigate and write about finance, this post is filled with so much incorrect information it really is a disservice to people trying to learn about sound financial strategies. I don't know what kind of mortgage you have, but every amortization schedule I have seen charges interest on the balance every month. The scheduled payment that is determined by the term is greater than the interest charged in that month so the balance decreases EVERY month until it's paid off. If you have an actual amortization schedule from a bank that demonstrates what your describing, please share!Brian Bewleyhttp://www.freebridgefs.comnoreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-10691218899945199612015-03-06T18:58:43.778-05:002015-03-06T18:58:43.778-05:00My HELOC is compounded semi-annually. How bad is t...My HELOC is compounded semi-annually. How bad is that? Also, can you provide interest table calculators on HELOCS. I have a $580K HELOC at 3.7% with a semi-annual compounded rate of 3.7286. I am one of those seniors in this high mortgage situation. Any advice would be great. Should I be looking for some other option? Anonymous since I am somewhat embarrassed by this.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5691217606623125653.post-90555732681455126632013-11-28T21:34:37.108-05:002013-11-28T21:34:37.108-05:00Are HELOC loans interest calculated more frequentl...Are HELOC loans interest calculated more frequently than mortgages?Anonymousnoreply@blogger.com