"Is 6% a pretty good interest rate, historically?"

Yes. 2 seconds with google would tell you that. You can google, can't you? Or do you need $3500 software to have you type the words into google at the right time to maximize your search results?

"With a 30-year, $200,000.00 mortgage in Canada with a 6% APR and a payment of $1189.65, the total interest cost over the life of the loan is actually $228,271.02, isn't it?"

Sounds about right. I didn't run the numbers, but they look about what I would expect them to be.

"What would you say if you borrowed $10.00 from me today, told me you would pay me back tomorrow, and I said, "Sure...just pay me an additional $10.00 tomorrow." What would you say? What interest rate would I be charging?"

NOT 100%, which is what your scamming self would say. You would be charging roughly 36500% APR.

"When we pay back the above mortgage, is this not 114% total interest cost?"

Yep. But again, interest as percentage of total cost is meaningless when talking interest RATES. What if you could keep the same total interest cost, but spread the length of the loan out to 300 years instead of 30 (assuming you lived that long). That completely changes the cost of the loan.

"And we sign up for this willingly?"

YES!!!!!

"And calvinandhobbes, you call this, "One of the cheapest sources of funds out there"??? You can't be serious! Is it not about time we stop paying mortgages like this?"

Of course I am serious. Even with all the downturns in the stock market, I've averaged over 10% return on my equity investments (that's stocks if you don't understand that). Say I wanted to buy a $200,000 house, and I had $200,000 in cash. If I had the ability to buy the house, or get a 30 year mortgage and take the $200k in cash and invest it instead, I would be a fool to pay cash for the house. That $228,000 in additional interest would be dwarfed by the additional investment income I would make. At 10% return, that $200k turns into ~1.1 million after yearly mortgage expenses of $14,400. If you just took your $200k and paid off your house right off the bat, you'd have no $14,400 expenses each year, but nothing to show at the end of the 30 years for that original $200,000 other than the house.

"There has got to be a better way!!!"

Yeah, have your house and your investment returns. Listening to your ignorance is certainly not a better way. There's no doubt there are times when paying down loans is better, but not because of the reasons you give. You are flat out clueless, or worse, a pure criminal. Luckily, the US government makes it illegal for people to talk in interest rates the way you do when marketing loans. Wouldn't doubt the Canadian government is similar.

"When we pay back the above mortgage, is this not 114% total interest cost?"

Ken, you know something? I'm a nice guy. I mention - I aced the college entrance exam in math, the SATs, in the late 70's.
In high school, I math-tutored a 40 yr old man, a neighbor to get his GED (A high school equivalent degree from the government). At 17, I was able to look a man in the eye and make him comfortable that I thought no less of him for the fact that I had this one particular skill that he did not.

In the above case, I had to first understand where to start. Literally, with multiplication, division, etc.

If I ask C&H to choose one: Paying me 100% (over 30 years) or 10% (over one month) I know his answer. The former is an annual 5.3%, the latter, 214%.

When you talk about total interest cost, you go into meaningless territory. One needs to look at APR. If they don't, you get into dangerous territory. One in which an agent states that "$1 sent to your mortgage saves you $5 in interest [true] but $1 sent to you matched 401(k) only gets you $1 in matching [also true]" Unfortunately, the $5 is the result of 30 years interest not paid, the $1 is instant, and can't even be discussed in annual terms. The $2 in one's matched savings then has 30 years to grow, and has the potential to be far more than that $5 saved on the mortgage.

In the end, the choice to pay a mortgage early is to choose a 6% (or lower now, 4.5% for new loans) fixed return. Period. Like a 30 year, 25 year, etc, CD with no early withdrawal rights. It's not good or bad, per se, it just is.

And to C&H's point, yes, 5%/yr is cheap money. My first mortgage was 13.5% in the 80's. My 5% mortgage costs me 3.6% after taxes, and inflation kills most of that.

Ken - you realize, I'm not even talking MMA here. There's a fundamental gap in your education regarding time value of money. This is not just a catch phrase, in the subject of finance classes I had in grad school. Taught in grad school, but the math is no more complex than what my 6th grader needs to know for her classes.

Is 6% a pretty good interest rate, historically?

With a 30-year, $200,000.00 mortgage in Canada with a 6% APR and a payment of $1189.65, the total interest cost over the life of the loan is actually $228,271.02, isn't it?

What would you say if you borrowed $10.00 from me today, told me you would pay me back tomorrow, and I said, "Sure...just pay me an additional $10.00 tomorrow." What would you say? What interest rate would I be charging?

When we pay back the above mortgage, is this not 114% total interest cost? And we sign up for this willingly? And calvinandhobbes, you call this, "One of the cheapest sources of funds out there"??? You can't be serious! Is it not about time we stop paying mortgages like this?

There has got to be a better way!!!

http://www.sequenceinc.com/fraudfiles/2010/08/07/united-first-financial-is-being-shopped-to-private-equity-groups/

I hope it's true. And I hope no one buys them. Anyone looking to buy UFF should look at Bank of America buying Countrywide. All BOA really got for their money was liability.

"Percentages are meaning less if they don't account for time. If I loan you $100 and make you pay me $200, that tells me nothing of the cost of the loan because time isn't specified. "

I am appalled at how the average person doesn't get this.

1 - "since a $1 sent to mortgage cancels $4 worth of interest" you are better off sending that dollar to your mortgage than to your (100% matched) 401(k)

2 - Same logic above, "proves" there are times when paying the mortgage or other low interest debt takes priority over that 18% credit card.

There is one example after the next in which agents simply ignore the time value of money. If I offer to lend C&H $10 for $20 in return, he doesn't shout "ripoff", he either asks me "how long a time?" or says sure, for (say) 15 years he'll go for it. To agents, this doesn't matter, the math doesn't come into play, just the scam.

The website invites spam and trash and gets rid of those who criticize it. Not having enough spam, it apparently creates its own imaginary characters to add even more. So why be surprised when you find "artists" hustling their wares here?

Ken, now I believe you are a scammer.....

"Here is a scam for you...Our banks are legally able to quote "5% interest" on our mortgage, when in reality they should be saying, let me see...186,500 divided by 200,000 is..."93.25%!!!" Now that is a scam!"

the US government requires people talk in APR for interest rates to specifically stop people from making deceptive claims like you are making.

Percentages are meaning less if they don't account for time. If I loan you $100 and make you pay me $200, that tells me nothing of the cost of the loan because time isn't specified. If I owe you $200 next week versus next year versus anytime, those are all VERY different scenarios. $200 30 years from now is very little money compared to next week.

Should you not be able to sell MMA or should be not be able to buy them....off course not. It's their choice. But you shouldn't be able to make the complete BS claims you are now making, either through incredible ignorance or just sheer criminal activity.

As for the last time I looked at my amortization table...that would be the time I made my last house payment. I updated the table every month for the almost 6 years it took to pay off my mortgage using simple prepayments instead of an expensive, useless, smoke and mirrors, black box middleman loan program like the crap you sell. And my bank was very straightforward with the total interest paid. Like most documents people sign, the total amount of interest to be paid was specified, to the penny.

You still don't realize a mortgage is one of the cheapest sources of funds out there. Compounding interest works both ways, both in paying it, and in earning it. If you can beat your mortgage rates, which many can and do...it's best to pay off your mortgage as slow as possible. But you don't mention that....not because it's untrue, because it's absolutely true....but because it will hurt your sales. And the UFF's sales are just about gone. I'm glad I played a part in that.

get some ethics and a financial education.
c+h

"Do the math, calvinandhobbes...$11,785.80 one-year interest cost divided by the one-year principal contribution of $2,490.01 is 473.32% of $2,490.01...473.32%!!!"

Absolutely meaningless. Those with any idea how interest is calculated would see that 6% of $200K is $12,000, and they'd expect the first year interest to be a bit less as principal is paid down.

What if my loan were interest only? But I decided to pay $1 in principal on 12/31? $12000/1= 12000000% OMG!

In your example the bank is changing 6%, no more no less. My 5th grader would like to lend you her math text from this past year.

calvinandhobbes, you are suggesting that I have a "problem", and that my problem is that I don't realize that DIY is easy?

Mind you, I see you are accusing the forum owner of having a "problem" also, so I guess you feel everyone who isn't you is a problem! LOL

Of course DIY is easy...I'm not stupid. Whether DIY is easy or not has absolutely nothing to do with this thread!

When was the last time you looked at your amortization schedule? Have you ever looked at it? How much time did your bank review this document with you? Did the bank demonstrate to you exactly how much of your hard-earned dollars they were taking each month just for the privelege of helping you purchase a mortgage?

On a 30-year, $200,000.00 mortgage at 6% APR, the payment in Canada is $1,189.65. Are you aware that in month #1, $201.93 of this payment goes to principal, and $987.72 goes to interest? Are you aware that in one year we will pay our morgage principal down by a grand sum of $2,490.01? Are you aware that the bank will charge us $11,785.80 for this privilege? Do the math, calvinandhobbes...$11,785.80 one-year interest cost divided by the one-year principal contribution of $2,490.01 is 473.32% of $2,490.01...473.32%!!!

And you think this is fair??? You must own a lot of bank shares!!!

The Money Merge Account system exists because some of us are convinced that there must be a better way; after all, interest cancellation accounts are available in banks in other countries like England and Australia...why should they not be available to Canadian consumers?

I am not suggesting that you, or anyone else, must (or even should) purchase the Money Merge Account system. If you are happy paying exorbitant amounts of money to your bank then go ahead...make my day. If you want to prepay your debt on your own, using your own resources, your own calculations, and your own time, be my guest.

But calvinandhobbes, are you suggesting that Canadian consumers who freely elect to invest in a debt payoff and cash flow management tool like the Money Merge Account system should not have the right to do so? Are you suggesting it should be illegal in Canada to purchase this optional financial tool? Would that make you happy?

Ken wrote:
"If you borrow $20.00 from me today, would it be fair if I ask you to pay me back $38.00 tomorrow? If not, why do we allow the banks to charge us such insane amounts of interest?"

Ken, you're either blatantly disingenuous or you're an idiot. If I borrow $20 from you today at 5% interest and pay you back with small (~$0.11) monthly payments, then yes, I will have paid you approximately $38 - THIRTY YEARS FROM NOW.

Are you seriously so incompetent as to compare a $20 loan over 1 day to a $200K loan over 30 years? Do you really not understand that interest paid is a function of amount borrowed, rate *and* time? I just can't believe you're that stupid, so I'm going to have to conclude that you're a liar and a scam artist.