Senappa: You are right that one can't make big prepayments by "savings" in a home ownership situation- that is why I referred to bonuses/lump-sum monies. I wish Canada had similar mortgage-interest tax deduction law as US -then this discussion would have been entirely academic.

For the mortgage/bank-balance heart beat, I think people who have done their budgeting/financial planning well should not be in that situation. As for unanticipated circumstances - if it is just a question of liquidity for a month or two, then one can use the line of credit. If the unfortunate situation is long-term than one is in trouble anyways irrespective of the mortgage amount.

Anyhows, I am first time buyer too - and it seems irrespective of how one goes about the process, "on-a-wing-and-a-prayer" is a big part of it

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Originally posted by rashmig

Senappa: You are right that one can't make big prepayments by "savings" in a home ownership situation- that is why I referred to bonuses/lump-sum monies. I wish Canada had similar mortgage-interest tax deduction law as US -then this discussion would have been entirely academic.

For the mortgage/bank-balance heart beat, I think people who have done their budgeting/financial planning well should not be in that situation. As for unanticipated circumstances - if it is just a question of liquidity for a month or two, then one can use the line of credit. If the unfortunate situation is long-term than one is in trouble anyways irrespective of the mortgage amount.

Anyhows, I am first time buyer too - and it seems irrespective of how one goes about the process, "on-a-wing-and-a-prayer" is a big part of it

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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada

Dear Chandresh and Pramodji,

I have sent emails to you. Please comment when convienent.

Rgds,
Hiren

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Originally posted by hchheda

Dear Chandresh and Pramodji,

I have sent emails to you. Please comment when convenient.

Rgds,
Hiren

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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada

Thanks Pramodji for your valued comments.

I pointed this in your email reply as well - interest rate when compounded monthly works in favour of the payee - correct me if I am wrong.

Regarding additional charges by banks, that is another reason why I chose to 're-invent the wheel' so that I can compare the differences and know exactly what I am paying more. I am sure no lender gives you all the breakup upfront - if not requested specifically.

Thanks again for your email reply and your comments.

Hiren

Thanks Pramod.

I like the Smith Manouvere but it is a pretty aggressive leveraging strategy and clearly not for faint-of-heart or financially unsophisticated )

I think a modified Smith Manouvere is better where you add the monthly equity to a pre-existing portfolio (e.g. equity mutual funds)- otherwise I can't imagine being able to use $200-$300/month to buy any investment without frittering away high percentage of $ on commission and fees. Also, I think for it to really work, one would have to have a bank/lender offer readvances on fairly low rates/fees and then invest in stable vehicles with the discipline of re-investing the tax refund back in either the mortgage or the portfolio.

I am quite intrigued with the idea and I was wondering if we can have a bit more discussion on it. Are there any CD member who has used it successfully/ unsuccessfully and if they' be willing to share their experiences and relevant information.

On a related but different note, could any of the CD members please give more details about CMHC surcharge - what% it is and if it is negotiable. Thanks.

Quote:

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Originally posted by hchheda

Thanks Pramodji for your valued comments.

I pointed this in your email reply as well - interest rate when compounded monthly works in favour of the payee - correct me if I am wrong.

Regarding additional charges by banks, that is another reason why I chose to 're-invent the wheel' so that I can compare the differences and know exactly what I am paying more. I am sure no lender gives you all the breakup upfront - if not requested specifically.

Thanks again for your email reply and your comments.

Hiren

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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada