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Dif3r t1_je9z0rd wrote

38 year amortization? Is that even a thing? I see you used EUR but that length seems insane to me when North America only somewhat recently started on doing 30 year loans.

Take a look at some early payment calculators too to play around with seeing what early payments can do to you for reducing interest paid to the bank and shortening the payoff period.

Personally I have a 25 year loan that I'm making some pretty aggressive extra principal payments against. When all is said and done the trajectory is that it'll be paid off in 18 years. Or we potentially have the option to "recast" our mortgage and lower payments (increasing total interest paid to the bank but decreasing pressure on us if things really go sideways).

Play around with this calculator to see how much you can save by doing extra principal payments https://www.calculator.net/mortgage-payoff-calculator.html

Note that this relies on the ability to make extra payments against the principal not prepaying for upcoming months.

These are the numbers I got playing with the calculator I linked above Loan 223k (250k - 27k downpayment) Term 38 years Interest 3.65%

Let's say you do an extra $100 a month, you could cut that down to 31 years of repayments and total interest paid to the bank is $149k which is less than the original 190k you would be giving the bank over those extra 7 years.

If you combine that with say an extra $1000 payment once a year you can shorten that even further to a repayment period of 27 years and only give the bank 127.6k in interest.

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TenDogsInATrenchcoat OP t1_jea1gjq wrote

Thanks for the super detailed comment.

I'm lucky enough to be in a position where I can pay off a loan early, but from what I gathered, the bank in question will still charge you 38 years of interest, even if you pay it all back in say 20 years.

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NiftyJet t1_jeaatqf wrote

That is a ridiculous deal for you. If you pay the loan early, you shouldn't have to pay all the interest. That's the whole point of paying the loan early. I'd check with your lender. If that's what they're actually offering you, I hope you haven't signed this deal.

If you're able to pay it off early, at the very least get a shorter-term loan so you don't have to pay so much interest. This is predatory. Is this how things are done in Europe? It's insanely immoral.

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Dif3r t1_jea9tmh wrote

Ahh I guess that's where things go wrong. I can't say how it works in Europe or whether that's common or not since I'm in NA and know more about how it works in North America but are you able to shop around to other banks for mortgages that do allow early payments against the principal? Is this early payment thing even common?

At the end of the day the bank still needs to make their money but you still need to get the best deal you possibly can so don't get pressured into taking a loan if you have time on your side.

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havetobethatguy t1_jea2q9c wrote

https://www.wptv.com/money/real-estate-news/federal-housing-administration-greenlights-40-year-mortgages

just fyi 40 year mortgages are coming to america

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Cruian t1_jea43jt wrote

You just have to be that guy that mentions that, don't you?

40 years seems like it could be difficult to get to work. That's age 25 to 65 for example. Buy much later and you're into your 70s...

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havetobethatguy t1_jea8jfh wrote

>“I once did a 30-year mortgage for a 97-year-old woman,” recalls Michael Becker, branch manager and loan originator at Sierra Pacific Mortgage in Lutherville, Maryland. “She was lucid, understood what she was doing and just wanted to help out a family member [by taking] some cash out of her home, and had the income to qualify and the equity in the home — she owned it free and clear — so she was approved.”

https://www.bankrate.com/mortgages/mortgages-for-seniors/#mortgage

as long as you can prove income, pass debt to loan ratios, etc age is not a factor that may be considered in America anyway

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Cruian t1_jea93ns wrote

I'm thinking more on the home buyer's end. Just thinking about still having a mortgage into 70s when only 3x years old (unless they make extra payments).

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havetobethatguy t1_jeadl0i wrote

I certainly hope I am not still making payments at that age, but I'm also not sure that its all that uncommon even now with 30 year mortgages and people refinancing or moving and starting over, etc

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