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Principle - Mortgage Renwal

Seesus

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Good Day all, Apologies in advance if this looks like an extremely basic question to some.

I am just trying to understand a scenario a bit better e.g.

1. Say i have a mortgage of 100K for 20 Yr amortization and a term of 2 years
2. Total Principal portion of repayment for this term of 2 years is 20K


So once this 2 year term ends, I can re-negotiate the rate and amortization etc of the mortgage etc however as i have re-paid 20K in 2 years then would i be renegotiating a mortgage of 80 K at that time ?? I am trying to understand that paying down the principal portion does infact bring down the total amount that i need to get the mortgage for at the time of renewal upon conclusion of the term ?

Much appreciate all the help.
 
Most of the bank websites have on line calculators which will show you this. At least I know TD does.
 
Most of the bank websites have on line calculators which will show you this. At least I know TD does.

I have seen those and they do only mention details up until the end of the term. So in this case the calculator is showing BALANCE at the end of the term (or 80K after 2 years). My question is that at the end of the term when i re-negotiate the rates etc, would my total principal mortgage be of 80K instead at that time ?? as that should then reduce my total payment per month (assuming if the interest rates stay the same).

the TD calculator shows that my yearly payment stays pretty much the same but principal amount goes up. however I am thinking that my over all payment must go down as the amount that i owe them is much smaller after 2 years.

Hope i am not confusing myself.
 
So once this 2 year term ends, I can re-negotiate the rate and amortization etc of the mortgage etc however as i have re-paid 20K in 2 years then would i be renegotiating a mortgage of 80 K at that time ??

Correct. You negotiate based on what you require at that time, which would be $80K.

You also can boost it up if you require additional money for something else (renovations, repairs), or a smaller amount if you have money on hand to cover the difference.
 
2. Total Principal portion of repayment for this term of 2 years is 20K


So once this 2 year term ends, I can re-negotiate the rate and amortization etc of the mortgage etc however as i have re-paid 20K in 2 years then would i be renegotiating a mortgage of 80 K at that time ?? I am trying to understand that paying down the principal portion does infact bring down the total amount that i need to get the mortgage for at the time of renewal upon conclusion of the term ?

Much appreciate all the help.

Its not as straight forward as that. If you do a quick search for amortization tables you will find your answer. Using the data you provided and an assumed interest rate of 5% and monthly payments the balance at the end of 2 years using 20 year amortization would be $93,872.

Payment Principal Interest Balance

1 ($659.96) $243.29 $416.67 $99,756.71
2 ($659.96) $244.30 $415.65 $99,512.41
3 ($659.96) $245.32 $414.64 $99,267.09
4 ($659.96) $246.34 $413.61 $99,020.74
5 ($659.96) $247.37 $412.59 $98,773.38
6 ($659.96) $248.40 $411.56 $98,524.98
7 ($659.96) $249.44 $410.52 $98,275.54
8 ($659.96) $250.47 $409.48 $98,025.07
9 ($659.96) $251.52 $408.44 $97,773.55
10 ($659.96) $252.57 $407.39 $97,520.98
11 ($659.96) $253.62 $406.34 $97,267.36
12 ($659.96) $254.68 $405.28 $97,012.69
13 ($659.96) $255.74 $404.22 $96,756.95
14 ($659.96) $256.80 $403.15 $96,500.15
15 ($659.96) $257.87 $402.08 $96,242.28
16 ($659.96) $258.95 $401.01 $95,983.33
17 ($659.96) $260.03 $399.93 $95,723.31
18 ($659.96) $261.11 $398.85 $95,462.20
19 ($659.96) $262.20 $397.76 $95,200.00
20 ($659.96) $263.29 $396.67 $94,936.71
21 ($659.96) $264.39 $395.57 $94,672.33
22 ($659.96) $265.49 $394.47 $94,406.84
23 ($659.96) $266.59 $393.36 $94,140.25
24 ($659.96) $267.70 $392.25 $93,872.54
 
I have seen those and they do only mention details up until the end of the term. So in this case the calculator is showing BALANCE at the end of the term (or 80K after 2 years). My question is that at the end of the term when i re-negotiate the rates etc, would my total principal mortgage be of 80K instead at that time ?? as that should then reduce my total payment per month (assuming if the interest rates stay the same).

the TD calculator shows that my yearly payment stays pretty much the same but principal amount goes up. however I am thinking that my over all payment must go down as the amount that i owe them is much smaller after 2 years.

Hope i am not confusing myself.

Your total payments would not be reduced (assuming same interest rates) unless you re-amortize back to 20. The payment is based on a 20 year re-payment schedule.

At the end of your 2 year term, assuming you've paid 20k
You still owe 80k but now, your continued payment term is 18 yrs. unless you renegotiate it and put it back to 20, this would reduce your payments if all other things being equal.



Your mortgage/realtor should be explaining this to you instead of a message board.
 
Good Day all, Apologies in advance if this looks like an extremely basic question to some.

I am just trying to understand a scenario a bit better e.g.

1. Say i have a mortgage of 100K for 20 Yr amortization and a term of 2 years
2. Total Principal portion of repayment for this term of 2 years is 20K


So once this 2 year term ends, I can re-negotiate the rate and amortization etc of the mortgage etc however as i have re-paid 20K in 2 years then would i be renegotiating a mortgage of 80 K at that time ?? I am trying to understand that paying down the principal portion does infact bring down the total amount that i need to get the mortgage for at the time of renewal upon conclusion of the term ?

Much appreciate all the help.



You can negiotiate a new rate with ANY bank/broker and they should be able to hold a rate for 120 days (so take your time and shop before renewal). You can also change your amortization to increase or decrease your payments based on your budget and objectives.

Mortgage renewal is also a good oppourtunity to do a full appraisal and refinance up to 80% of the current value (even if you don't need the money you can put it on a secured line of credit)

Doing this "protects" the valuation of your home (if the property drops in value you have secured the value by the refi) ... also provides a means of funding if you ever need it later on and some argue that it can protect you from identity theft and others placing 2nd mortgages on your home (if there is a large first charge on the home.. but obviously there is a downside to doing this)

Hope this helps
 

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