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Pay-off your mortgage 10 years early 🤫 (is it worth it?)
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- Опубликовано: 3 авг 2024
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00:00 - Intro
01:51 - Mortgage maths for the primary house
03:21 - Prepayment
05:52 - The math on $100k mortgage
11:23 - Why prepay?
12:28 - When and how much?
14:42- Investing in appreciation real estate
18:25 - Investing in Cashflow Real estate
21:28 - Outro
I am a licensed mortgage agent M21004312 working with Dominion lending centres, Valko Financial FSRA13047. I work with over 60 lenders including the top banks to provide an array of mortgage products that are suited to your needs. I can help you with your housing needs across all provinces in Canada (except Quebec).
I help First time home buyers & investors make smart realestate decisions based on numbers and not emotion. Want to book a call 👇 (It's free 🥳)
www.growwithnav.com/book-a-call
Rent vs buying:
1. • RENTING keeps us POOR ...
2. • "Renting is paying som...
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My mission is to provide you with actionable content that enables you to build your wealthand live up to your potential. I came to Canada with my wife (Simran), during the pandemic in 2020, started with very little money, no job - to today, where I recently quit my job after building my side hustle to a cool 6-figures in revenue. I have met so many amazing people and mentors along the way, and I want to bring everything that I have learnt and continue to learn to you via this channel.
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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.
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Thanks for sharing your math, useful information.
Great video ..awesome ..thanks
Great video, really helpful.
👏👏
great video 😊
With option 2 the extra amount that you pay also goes to principal. I prefer second option, this way I still have room for lumpsum payment at the end of the year.
Everything looks good in Excel and in calculation. But you have to have at least a 10% downpayment towards your primary house and 20% on your investment property. Which is anywhere close to $200k of an idle model sitting in your account. I don't think most people will have this kind of money in the current job market. Nevertheless, if you have this kind of money this is a good strategy.
True❤
Bro the video is crazy informative! Amazing research and strategy.
Thank you 🙏
@growwithnav - is it advisable to make increased payments 300k condo, say extra 500 a month or invest to buy a townhouse with tenant in basement. Thanks 🙏🏻
Good explanation Nav. We need to be cautious about pre-payment penalty that locks us certain number of years in initial days. Also, stock market and shock to stomach losses if any like 2008 is something to take into consideration. Age is an important factor, visa status if un USA etc. Lots to consider
Just an FYI... Its a myth that increasing the payment by 15% puts the payment in interest and principal both . The 15% increased portion always gets applied to the principal unless its dud lender and they have specifically mentioned in their fine print.. else most lenders will apply increased portion on principal
Hello, Amazing video Nav. Can you make a video on interest rate differential (IRD).
Do check the video on fixed vs variable rates
hello..can u please do a video on term and full life insurance please!!
Very informative video, thanks! The key starting point is to have either savings from salary or positive cash flow from investment to keep the snowball rolling.
🙌🙌
Thanks for the video Nav. I had a quick question and I do apologize if I missed something but on the last example of 'Investing in Cashflow Real Estate' you mentioned that the positive cashflow is being reinvested into the primary home but that amount to my understanding would change depending on the income tax strategy used so it wouldn't be the exact positive cashflow amount being added as a prepayment, correct?
Yes - you will be paying taxes on the cashflow per your overall income.
Everyone will be different tax wise, esp when you have a business.
Good information !!!! I invest on product which give me more than 6% and use that to earn money is the best
A very detailed and well laid out video. It’s been a question on everyone’s mind. Does this change in case you are in negative amortization? I guess I’ll have to do the math myself. Thanks Navjyot!
You can make voluntary lump sum payment of $XX / month towards principle for the next few months to get it down. I would start doing the 1% for sure.
Hi sir , will be needing your support and guidance. Got our PR and will be coming soon to Ontario...very valuable information
💯💯
@@growwithnav Thank you Sirji
I like your videos as they are very informative. Just one suggestion- the audio quality is low. Even though I increased the volume by more than 50% the audio was not very audible. Rest all good👍
I am in India… so don’t have access to my studio with proper lights and audio. Sorry about that :)
9:14 Can you please make a scenario where you are investing the saved interest in the S&P 500 instead of just showing savings in interest (like SIP). Then you add the interest saved plus the returns you make on the S&P 500 and see how much of a difference it will make? The second option will be still better but the option 1 will be slightly better.
Good video with practical examples.
Can you please make a video about investment, house purchase and retirement planning for a family who moved to Canada in their early 40s. Figures always look good and comfortable when you start investments from 20s/30s. But solving above issues especially when you are already in 40s would be tricky one. Would love to see such a video from you with actual examples.
I would love that too. Make some videos for people in their 40s who didn’t have this kinda luck and opportunities that today’s generations has. I think babyboomers did well. Now gen z & a will be ok. We zen X were not presented with a revolutionary shift in the paradigm to take advantage off.
I think we have to wait for those videos until NAV turns 40+ 😂
If I was in my 40s, I would want to improve my income significantly and invest in value realestate to get ahead. Will try and make a video on this.
But honestly, more income is the only answer… because we need to invest aggressively to make up for time.
He has not calculated death..................................If you die all calculation stays on paper along with Canadian Passport....................lol
@@maaki3389that’s Everywhere in the world
What about taxes on the gains?
Any video expected on Smith Maneuver?
Nothing planned for now. It’s not for everyone. And better in a more stable market with lower interest rates.
Can you please explain how to benefit from Smith Manouver strategy - where you can deduct your interest rate on Principal Residence Mortgage. (Tax-Deductible Canadian Mortgage interest payments)
Will plan a video around this.
It’s a decent strategy when the interest rates are lower and the market is a bit more stable than what it is right now.
What math you suggest in investing in first home- should we put maximum 20% as down payment and put rest money in TFSA or other instruments or try to put maximum in down payment itself?
10% for first home is ideal… 20% if you have it - then sure. Do check the video on downpayment.
Can you please do more videos on stock market, crypto and other investments options. Also it would be great if you can share your portfolio as well!
I have made a detailed video on this… do check… also, you can follow my portfolio on blossom blossomsocialapp.page.link/growwithnav
@@growwithnavon Blossam can you show the amount of each of your holdings rather than % pls
You can only see your own actuals. My portfolio is about $80,000 between me and my wife if that’s what you want to know.
HI NAV! hope everyone is well ! Can u pls explains the major drawbacks of having your primary home as an investing property! Also, considering that ' the current rent is genuine if you are alone in Canada and dont have too much family expense ' will be happy to hear abt this!
Made an entire video on this. Do check it out.
Thanks, I ll check it. I might have skip that i guess😅😅. But , i see most of your videos👍🏻
Hello.This is an informative video.
I was thinking if someone wants to become mortgage free because one may want to live in different countries on working holiday visa.The income may highly fluctuate while on working holiday visa.Then what do you recommend ?
Sure that’s a very specific requirement and might make sense to be mortgage free
I think RE estimates only work for GTA. In edmonton i have seen detached properties going for same or even less than the actual buying price after 20 yrs. here primary home is just expense and RE numbers does not work to supplemnet income to pay off early. Eg - a 2002 detached in very popular area in SE edmonton sold in 2022 for approx same purchse value of 390k. Even today its even less value (good well connected in demand desi area, but thats how market is here). Maybe it changes in future but past numbers dont work.
You are right, but are the rents the same too?
You have to compare long term cost of renting vs buying when making the decision.
The math on 100K - mortgage payoff vs investment, it would be great if you could also add the point where a person is reinvesting the 3661$ per month (for next 5 years) which they are saving because of paying the mortgage at 20 yrs. This would easily add around 200K plus in savings, so 142K + 240K (approx). However, as you said hybrid approach of 1 % is great.
🙌🙌
Hi Nav , thanks for the detailed info. If you remember me I am one of your old RUclips subscriber and I had scheduled a call with you in 2020 when I was about to get my PR . Are you still doing those calls ? I would like to book a 30 min call with you to discuss My current Mortgage .pls let me know
Hey :) you can book a call from the link in the bio 🙌
Great explanation... I have a question that I bought a condo for 144500 n rate is 6.79 % / year n 20%downpayment should I do prepayment if I m going to leave this lender after a year
No, just do a lump sim at the time of renewal if you want to
@@growwithnav thanks 🙏
I think one flaw in comparison of pre payment vs S&P return is he is forgetting the equity built on the house .. Since mortgage is paid off let's say 10 years earlier, house owner is sitting on the equity much earlier and technically his net worth is higher which is due to prepayment ... It can be complicated to calculate but certainly a factor..
The math on 100k- if you are First time home buyer, should you invest all your money in First home(which is not asset) or invest in TFSA, considering market is down these days?
suggestions
ecommendations?
That’s a renting vs buying comparison. Do check that video on the channel. Long term - buying always wins .
Sorry for being not clear. my question is Being a FTHB, should a person invest all money in first home(buying bigger value property considering market is low and appreciation on property will happen more) or should buy first home with(digestive price for instance: condo 500k\600k) and put other money in TFSA to diversify portfolio?
Isnt the calculation highly skewed in s&p favour? I mean with current interest rate of let say variable 6.8/6.9% you will be paying more in interest and calculation will change significantly
6.8 is today. The 25 year average is 3.74%. I have taken 4%. Don’t think you will be paying 6.8-6.9 for 25 years. My calculation is 25 years.
@@growwithnav By paying $100k lump sum, the house will be paid off in 20 years as compared to 25 years which means no mortgage for the next 5 years. I see you didnt take into account the 5 years saving of $3650*60 = $219k. This is a huge number which was missed. Also, paying towards the house is risk free vs investing in market.
You didn’t mention that …. If you pay off your mortgage & still have income … you can just invest the income & you’d have more cashflow without the mortgage
Compounding for 5 years is nothing compared to compounding of 25 years. Besides, I also did not mention that income in 20 years will be a lot more than what it is today - which makes a 3500 mortgage look nothing :) you would obviously be able to invest in the market irrespective of mortgage.
If investment property has positive cash flow, does it come under taxation?
Yes it does.
The rental income does have downtime/vacancy + operational expenses, which are not accounted for in this. And, it might make significant difference in cashflow.
Moreover, you have not touched on RRSP investmetns.. is that on purpose?
Yes any renovations over the years that can eat into the appreciation
I have accounted for vacancy, maintainence, property management, property tax, insurance.
I have made videos on RRSP on the channel :)
Donu think is it right time to buy first house ?
The time is right when you are ready 😀
@@growwithnav without pr we get home or no?
PLease make your video in a private space! lots of noise and disturbances in background
Paji apne confused kr diya.
First i was thinking to max out tfsa ....but now change it to paying down primary home first .
Yeh kahan kaha ? 😀
See the slide where I talk about when to pay down. It says you first should be investing 20% of net income into the stock market. Then think of paying down.
Also, where are we getting condos in GTA for 450k :)
There are quite a few under 500K in GTA 😀
The condo market has crashed 30-35%… people aren’t talking about it… many of my clients are scooping these right now
Under 500K with $1K maintenance per month 😮
Search Oakville with $400 in maintenance fees available
Where are you guys finding the money to psy yuese hige mortgages? $3500 per month ehen the job os paying 4k a month?
You should not buy a house if you are earning $4K a month. Most people buying are a couple earning a min $7-8K / month+ household (net)
@@growwithnav thanks for your answer. Is that both person working that amount combine or one person?
How can one make that 7-9k a month in Canada?
For most people , it’s household income.
@@growwithnav No one knows me here as i am anonymous, so i will share my income. I make $150k which is $102k after tax. Thats $8,500/month. Spouse makes the same. Our household income is $17,000/month. I understand not everyone can make $150k/year. But in 2024, making $80/year is not very hard which is $60/year after tax i.e. $5k/month. So, houselhold income of $10k/month after taxes is not very hard.
@@growwithnavwhat if one is single😂??Not everyone has a software developer wife!!!
By paying $100k lump sum, the house will be paid off in 20 years as compared to 25 years which means no mortgage for the next 5 years. I see you didnt take into account the 5 years saving of $3650*60 = $219k. This is a huge number which was missed. Also, paying towards the house is risk free vs investing in market.
True 💯
Compounding for 25 years will always beat compounding 5 years. Besides, I do believe we should pay off the house early… which is what the second half of the video is all about.
Why no videos on potatao talkies. We wait there
Focussing on this channel. Wasn’t getting a lot of response on PT since we stopped making immigration videos there :) so thought we should focus on the channel that’s giving value to people.
@@growwithnav we miss your normal daily vlogs .thats fun
I never pay extra money towards my mortgage! All my extra money goes to stock market! I am luckily able to get 11% annual return on my investment! So never never pay extra money to your mortgage! Its a liability!!
✅✅
If make 11% compounding every year. I would not buy a house
No matter how much earn it won’t be enough and one day we all have to die so all that earned money is of no use..All these people have generational inherited wealth and are investing it and growing money.
🙃
Well then keep ranting about that how life is hard!
You are comparing 1000 per month on stock for 25 years with 1000 per month for mortgage . But mortgage will be ending in 19.5 years. So technically it will 1000 towards mortgage for 19.5 years not 25? 🤔
True, but the maths will still work out :)
The question is , is it worth paying it off 5 years early… ? Answer is still yes - infact, I want to pay off 10 years early, but using a smarter technique that I discussed in the last section of the video.
@@growwithnavThe smarter technique is based on assumption that someone already has $100k. But it will not work if we are talking about surplus of just 6k to 10k a year and that case you will have to go for 1% to 2% payment to principle?
Yes 💯 the first strategy then.
@@growwithnav My Point is stats which you should at 10:49 are misleading. We will be mortgage free in 20 years so we should compare 20 years of investment (500 per month) which will be around 232,175.55 if we forecast it with 6% return.
Bhai ji I know you are nice guy by heart please Color your beard and trim it as it suits your occupation
Sir your language is too fast 😂
Keep it slow
🙌🙌
Step 1, get atleast quality mortgage in today’s crazy market. Over priced real estate is gonna be hell of fun.
And did I hear tenants paying for your interest. Lol. Another realtor brain washed individual who believes real estate is a passive income source.
My tenants pay for my interest and I get $600 a month in cashflow on 1 and $1200 on another.
Sure I have a -$800 a month condo too, but my equity position on that is $200K and it was my primary residence for 2 years before becoming a rental.
If you aren’t getting this, you aren’t buying and managing correctly.