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Originally posted by Pramod Chopra

I think you are confusing it with compound interest you get on your deposit. When you deposit some amount in Fixed Deposit with the bank, then you become the lender and the monthly compounding then would work in YOUR FAVOUR and NOT THE BANK as the bank then becomes the payee.

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Originally posted by hchheda

Quote:

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Originally posted by Pramod Chopra

I think you are confusing it with compound interest you get on your deposit. When you deposit some amount in Fixed Deposit with the bank, then you become the lender and the monthly compounding then would work in YOUR FAVOUR and NOT THE BANK as the bank then becomes the payee.

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Please correct me if my understanding of the interest computation is flawed -For a payee, when the interest is compounded monthly, he is liable only for the balance amount after payment of the monthly instalment. Each payment made is deducted from the next months outstanding principal. (Thats how I have calculated in the calculator I sent you)...Whereas for semi annual, you need to pay the interest even on the amount you have paid in the last 5 months.

thats how a layman like me would imagine it to be....

Hiren

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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada

Quote:

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Originally posted by Pramod Chopra

Quote:

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Originally posted by hchheda

Quote:

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Originally posted by Pramod Chopra

I think you are confusing it with compound interest you get on your deposit. When you deposit some amount in Fixed Deposit with the bank, then you become the lender and the monthly compounding then would work in YOUR FAVOUR and NOT THE BANK as the bank then becomes the payee.

---

Please correct me if my understanding of the interest computation is flawed -For a payee, when the interest is compounded monthly, he is liable only for the balance amount after payment of the monthly instalment. Each payment made is deducted from the next months outstanding principal. (Thats how I have calculated in the calculator I sent you)...Whereas for semi annual, you need to pay the interest even on the amount you have paid in the last 5 months.

thats how a layman like me would imagine it to be....

Hiren

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Hiren,

To demonstrate to you that Monthly compounding is better for the lender and not for the payee when compared with Semi Annual interest compounding, I have emailed to you 2 PDF files showing the calculations.

I am sure after seeing the calculations you would agree with me. If you do, please post it here for the benefit of other Desi's as well. However, if you still have doubts, then please see me personally in my office some time at your convenience and I am sure you would be convinced.

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Let's help each other to grow & prosper in Canada

Dear Pramodji,

Thanks for the time and efforts to educate this layman regarding this complex calculation. Your PDFs do indicate the difference in favour of semi annual as against monthly - however, the core issue still remains, how that interest amount is arrived at? I chatted with another CGA friend of mine who was also of the same opinion as you - but could not give me the calculation. I believe there is some complexity involved - can anyone explain here if possible, else I am meeting pramodji soon and discuss it anyways.

The only catch I can imagine is in calculating the interest on interest while compounding monthly - so if the principal repayment is less than the lending rate, the interest on interest is higher than the princpal repayment which reflects in higher payments each month....

Has been a learning experience so far...Chandreshji - your valuable inputs?

Ciao,
Hiren

Quote:

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Originally posted by reachash

Quote:

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Originally posted by Pramod Chopra

Quote:

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Originally posted by hchheda

Quote:

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Originally posted by Pramod Chopra

I think you are confusing it with compound interest you get on your deposit. When you deposit some amount in Fixed Deposit with the bank, then you become the lender and the monthly compounding then would work in YOUR FAVOUR and NOT THE BANK as the bank then becomes the payee.

---

Please correct me if my understanding of the interest computation is flawed -For a payee, when the interest is compounded monthly, he is liable only for the balance amount after payment of the monthly instalment. Each payment made is deducted from the next months outstanding principal. (Thats how I have calculated in the calculator I sent you)...Whereas for semi annual, you need to pay the interest even on the amount you have paid in the last 5 months.

thats how a layman like me would imagine it to be....

Hiren

---

Hiren,

To demonstrate to you that Monthly compounding is better for the lender and not for the payee when compared with Semi Annual interest compounding, I have emailed to you 2 PDF files showing the calculations.

I am sure after seeing the calculations you would agree with me. If you do, please post it here for the benefit of other Desi's as well. However, if you still have doubts, then please see me personally in my office some time at your convenience and I am sure you would be convinced.

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Pramodji,

Namaste, long time no see. If possible, could you please email me those pdf files as well. It would be interesting to see the same.

Thank you very much.

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Originally posted by reachash

..........................

To demonstrate to you that Monthly compounding is better for the lender and not for the payee when compared with Semi Annual interest compounding, I have emailed to you 2 PDF files showing the calculations.

I am sure after seeing the calculations you would agree with me. If you do, please post it here for the benefit of other Desi's as well. However, if you still have doubts, then please see me personally in my office some time at your convenience and I am sure you would be convinced.

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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada

Hi TK,

I came across info that you work for home building firm. we would greatly appreciate some of your insights in this matter.

I have been looking for a new starter home. I have finally decided on a freehold townhome, since it is less expensive and less work.

As you know, new townhomes are being constructed by the builders all over the GTA. some of them are as cheap as 200K to 220K. The advantage here is its just you and the builder and you have a brand new home to boot!

1) Are there any problems with these kind of homes?
2) do we need to watch out for any kind of mistakes when buying them?
3) how do we know which builders are good and who are not? any websites which rate them especially with discussion forums...

On the whole your opinion regarding this matter.

seenappa