3 ms·
Why not go for 1000 years mortgages or more? Serious question. Don’t stop going up in years until the monthly instalments are fractions of a cent. What could go
by alexbiet 4y ago
Why not go for 1000 years mortgages or more? Serious question. Don’t stop going up in years until the monthly instalments are fractions of a cent. What could go wrong?
- leetcrew 4y agoserious answer: you can probably see the issue yourself if you play around with a payment calculator that allows arbitrary terms: https://www.dallasfed.org/educate/calculators/closed-calc.aspx https://www.dallasfed.org/educate/calculators/closed-calc.as... in reality, lenders tend to set higher rates for loans with longer terms. but let's suppose you can get a 5% loan with any term you want. you can see from above calculator that the monthly payment starts to converge to some value when you pick a very long term. for a $100,000 loan at 5%, it looks like that value is ~$416. once you get close to that value, you're not significantly decreasing the monthly payment anymore. what you are doing is lengthening the period of time where you are paying much more interest than principal each month. with a 1000 year loan at 5%, you would only own 3% of the underlying asset after 30 years. for all intents and purposes, you have created a weirdly structured long-term lease. I guess this isn't all bad though. if your family manages to hold onto the property for a few generations, they will eventually have an absurdly cheap lease in real terms.
- UncleMeat 4y agoYou actually can get interest only mortgages, which are essentially infinity-year mortgages. This doesn’t bring the monthly payment to 0, since you still need to cover the interest.