Interest paid over five years
Loan opening fees
Appraisal and legal fees
Items to add up
- Interest paid over five years
- Loan opening fees
- Appraisal and legal fees
- Renewal fees at term
- Discharge fees at the end
Comparing two offers
A lower rate with high fees can cost more. Add up the total.
Why the posted rate misleads
Two loans at the same rate cost differently when fees differ.
Over five years, five thousand dollars in fees equals a thousand a year.
The comparison method
- Add all interest for the period
- Add every fee paid at the start
- Add the fees expected at maturity
- Subtract the principal repaid
- Divide by sixty months
The principal repaid
A shorter amortization costs more monthly, but builds more equity.
The effect of a shorter term
A three-year term means one extra renewal over five years.
Each renewal carries its own fees.
Add them before concluding a short term costs less.
Redoing the calculation each year
Rates move, and your property gains value.
An annual calculation shows when a change becomes worthwhile.
Keep your figures in a simple table, updated each year.
