Quote:
Originally Posted by WinnipegFan
Q I have to disagree with you. The less you put down the more the mortgage calculates into the cumulative interest, which is the majority of what you are paying for the first few years of that mortgage. I highly doubt you will get a return on the small percentages of money in comparison to the cost of borrowing it. My advice to all my friends and family is to suffer through and save up 35% down and do a secure line of credit. Then your interest is calculated monthly, you aren't front loading your interest and you are paying off your principal far faster.
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I have heard this a few times and am almost certain that it is not right.
Mortgages are not front end loaded, they look that way because you pay the most interest in the first month but that is because you are paying interest on the entire balance which goes down every month for approximately 300 months. After each month the balance is slightly smaller so the interest portion of the payment is smaller. With a fixed payment that means that the principle portion for the next month is slightly larger so as the years go on you are paying more and more principle and less and less interest.
That doesn't mean that it is front end loaded though.