3 ms·

I had this same intuition and built an inverted calculator a few years back where you tell it how much you want to pay and it tells you how much house you can a

by a13o 3y ago

I had this same intuition and built an inverted calculator a few years back where you tell it how much you want to pay and it tells you how much house you can afford. It compared what that payment gets you on a 30 year vs a 15 year mortgage. Obviously you can buy less house with the 15 year. But not that much less house, and the interest you pay will be so much lower, that it puts money in your pocket every year for 15 years; so it tells you what that is. I basically think we're all getting 30 year mortgages because we have to support the inflated house prices which drive the last generation's investments. If we aren't left holding the bag on this generational scheme, then who knows - the next gen may need 40 year mortgages to buy us out of our homes at their wage rates. https://observablehq.com/@a13o/anti-30-year-mortgage-calculator https://observablehq.com/@a13o/anti-30-year-mortgage-calcula...

phicoh 3y ago
The Netherlands had for a while a very popular mortgage where you only pay interest. So in effect an infinite mortgage. (It now less popular for tax reasons). The reasons that works is that in a 30 year period (in The Netherlands), prices of houses are likely to have gone up enough that the mortgage is only a small fraction of the value of the house. At the same time, due to inflation, the actual value of the mortgage in future currency units is also very low. So if you can expect a reasonable pension, there is no reason to worry about taking a very long time to repay a house. Obviously, the assumption is that houses will go up in value. If on average houses go down in value then this doesn't work at all.
- Doxin 3y ago
  One of the main issues with that form of mortgage is that people didn't realize, for they were not informed, the payment for the entire house was due in full at the end of the run time. It left a lot of people going "Wait, what? I thought I had paid my mortgage for 30 years? what do you mean I need to re-mortgage my house?"

by a13o 3y ago

phicoh 3y ago

The Netherlands had for a while a very popular mortgage where you only pay interest. So in effect an infinite mortgage. (It now less popular for tax reasons). The reasons that works is that in a 30 year period (in The Netherlands), prices of houses are likely to have gone up enough that the mortgage is only a small fraction of the value of the house. At the same time, due to inflation, the actual value of the mortgage in future currency units is also very low. So if you can expect a reasonable pension, there is no reason to worry about taking a very long time to repay a house. Obviously, the assumption is that houses will go up in value. If on average houses go down in value then this doesn't work at all.

Doxin 3y ago
One of the main issues with that form of mortgage is that people didn't realize, for they were not informed, the payment for the entire house was due in full at the end of the run time. It left a lot of people going "Wait, what? I thought I had paid my mortgage for 30 years? what do you mean I need to re-mortgage my house?"