My husband and I bought our first house just over three years ago. We were complete newbies at this “proper grown-up” thing, and set up the mortgage in a way that makes our biweekly payments 100% predictable. We knew at the time that this might not be the optimal way of doing things, but agreed to go this route until we got used to the concept of fiscal responsibility and adjusted our budget to match the size of the payments.
So, fixed rate it is, despite the bank trying to persuade us to go variable. We no doubt missed out on some savings there. And we also decided to break our property tax payments into installments that get added to the biweekly mortgage payment, to avoid the scramble to find a big lump sum to pay to the city every six months (we were planning our wedding at the time and knew we’d be completely broke until that was over).
We had been planning to renegotiate all these factors when our initial five year fixed term ends in 2011, but the letter we got yesterday might accelerate that schedule. Here’s the first snippet:
We remitted a total of on your behalf for your property taxes due this current year. On Jun. 19, 2009, the balance in your Mortgage Property Tax Account was a surplus of .
This has happened before. I called to ask whether the surplus would be taken off our next mortgage payment, off the principal, or be transferred to our current account. They told me it would stay in our Property Tax Account, but they would not be reducing our future property tax payments. I told them this was not acceptable, and made them transfer the surplus into our current account (we used it to pay the wedding caterers). This necessitated a visit to my local branch, and the signing of a couple of forms. It took more paperwork to get them to reduce our property tax payments to avoid having a surplus the following year.
Back to yesterday’s letter:
Currently, we collect bi-weekly toward your Mortgage Property Tax Account. Effective Aug. 28, 2009, that amount will be + 9. As part of our annual review of the tax portion of your regular payment, we assume that next year's taxes will be the same as this year's taxes.
Erm, what? We have a surplus at the current level of payment (a surplus that I’m going to have to work to get back into an account that we can access), the total sum needed will stay the same, so you’re going to increase our payments??!! (And no, this isn’t to offset lower interest rates – I looked back at our original paperwork and that’s not how they calculate it).
Are you just sitting there in your offices, collecting interest on our money and laughing at us????!!!!
We’d already planned to see a financial adviser some time this year to discuss mortgages, savings, pensions, and investments, but I think that after reading this letter we’ll be making some calls this very weekend.
-
Recent Posts
Recent Comments
- Cath@VWXYNot? on Book reviews – Knowledge Translation edition
- Grant Jacobs on Book reviews – Knowledge Translation edition
- Cath@VWXYNot? on Last Saturday:
- Alyssa on Last Saturday:
- Cath@VWXYNot? on I WROTE A BOOK!
Blogroll
- A Lady Scientist
- Academic International
- Alexander Honkala
- Ambivalent Academic
- Amelie's Welt
- Apple Pie and the Universe
- Arduous Blog
- Balanced Instability
- Blue Lab Coats
- Cancer Evo: Evolution and Cancer
- Candidate Models
- Chemical BiLOLogy
- Curiosity Killed the Cat
- Delicious Juice
- Dinner Party Science
- Dreams and Hopes of a (Former Postdoc) Scientist
- DrugMonkey (ScienceBlogs)
- DrugMonkey (Scientopia)
- Endless Possibilities
- ERV
- Everything and More
- Exponential Book
- Expression Patterns
- Fejes.ca
- Fumbling Towards Geekdom
- Grumpy rumblings of the untenured
- In Scientio Veritas
- It's a Micro World After All
- Kiwihorizons
- Life and Joys of Lisbeth and Tue
- Looking for Detachment
- Masks of Eris
- MicrobiologistXX
- My Fair Scientist
- Neurotic Physiology
- Not To Be Trusted With Knives
- Post Doc Ergo Propter Doc
- Prof-like Substance
- Professor in Training
- Punctuated Equilibrium
- ScientistMother – Raising Replicates
- Some Lies
- Stripped Science
- The Assertive Cancer Patient
- The Digital Cuttlefish
- The Excitable Scientist
- The Gene Gym
- The Happy Scientist
- The Hermitage
- There and (Hopefully) Back Again
- This Scientific Life
- Unbalanced Reaction
- Uphilldowndale
- Xykademiqz
- You Do Too Much
Categories
- bad people
- blog buddies
- blog roll
- book review
- Canada
- career
- communication
- competition
- current affairs
- cycling
- drunkenness
- education
- embarrassing fan girl
- English language
- environment
- evolution
- exercise
- family
- food glorious food
- freakishness
- furry friends
- grant wrangling
- hockey pool
- medicine
- meme
- meta
- music
- nature
- original research
- personal
- photos
- politics
- Primate Party
- publishing
- rants
- science
- silliness
- snow
- sport
- technology
- travel
- UK
- Uncategorized
- Vancouver
- videos
Archives
Meta
They’re all b***tards, you know.
I also like the “mortgage life insurance”, which foolish people like the Wintles have. This involves a fixed payment on top of each mortgage payment, to provide a modest level of life insurance coverage should one or other of us die. The payout is the remaining balance on the mortgage. Which is, of course, decreasing every two weeks. In another couple of years we would be potentially paying exactly the same premium for a potential payout that would be down in the single digits of thousands of dollars.
Yes, I know they allegedly adjust the premium to take this all in to account, but it still seems like a huge rip-off. A huge, but easily cancelled, rip-off.
Cath, I can put you in touch with a mortgage broker whom I trust, if you want to ping me an email.
Will do, thank you!
We also got talked into the mortgage insurance, and figured out the catch within a couple of weeks. We were also going to wait until the end of the first five year term to fix it, but quite possibly not any more. It doesn’t make too much difference right now, given that only ~40% of each payment actually pays off the principal rather than the interest (yes, I have a spreadsheet. It’s quite satisfying to see that % inching ever so slowly upwareds).
When I bought my house 4 years ago, I also chose the predictable, fixed rate mortgage payment plan, and given the ongoing crisis, I’m glad I did. My property taxes are also included in the monthly payments, and for the one year in which there was a surplus, I received a check for the amount. I didn’t want to have to pay a lump sum either, because property taxes in my area are quite high – primarily because of the existing schools, and the need to build new schools with increasing demand (a new high school and a new elementary school were added in my neighborhood with the last two years).
Schools schmools, we’ve got Olympic construction costs to cover! Expecting a bump next year. Immensely excited about the Olympics though – we have tickets for several events and are getting a new aquatic centre about 10 minutes walk away as one of the legacy facilities.
NB the bump is predicted to come AFTER the next taxes are due to the city, so that’s not why the bank increased our payments.
I don’t understand any of this =/
In January I finally figured out RRSPs, after the bank called all their customers in to talk about stuff if they had any questions about taxes and finances, and it was very disheartening to have to tell the bank employee who was clearly at least 5 years younger than me that I had never had a proper job and had no clue about money. He drew me a schematic about how it all works, and I got to keep the picture for reference.
My income this calendar year will be even less than my student stipend was, so I doubt I’ll ever qualify for a mortgage ever so I shouldn’t care that I don’t understand the math, right?
I’m still pretty clueless too. And if I didn’t have the mortgage, I’d have more disposable income OR more freedom to explore e.g. freelancing.
Case in point: a high-up management person at my former company was always delighted when an employee bought their first house. He even said to my face “this is great, it means you can’t leave now!”. He said the same thing to my husband at a company BBQ, and got the reply “you know, if you pay her more money, we can get an even BIGGER mortgage and then she REALLY won’t be able to escape!”
And then I got a new job.
I was footloose and fancy-free without a mortgage for many years, and was pretty hesitant about buying a house. However, as a single person with no children, I was getting nailed every year with substantial federal income taxes, and I hated writing a check for the extra amount I inevitably owed every April. In fact, I felt that my sole function in society was to work hard and pay taxes.
Of course, now I just pay a different kind of tax … so perhaps that is my function in society. đ
Ah yes, in the US you can tax-deduct mortgage payments, or interest, or something, can’t you? Not so north of the 49th, unfortunately.
But at least our banks are regulated, no thanks to Stephen Harper.
Banks suck. I don’t know if credit unions exist up North, but here in the US, they’re marginally better.
Interest and property taxes, Richard. Makes it worthwhile to buy a house, if you can save enough for the down-payment. Texas is unusual in that there is no state income tax (wonder why the Yankee Bush family moved here?); however, property and sales taxes tend to make up some of the difference.
Plus, it’s like a gazillion degrees in the shade outside right now. Srsly.
Ugh, I think my head is spinning, thus, I’m still content to throw my money away and pay rent every month. At least a lease contract is only about 2-3 pages of 12pt, 1.5-2 spaced, text.
Sounds a lot more complicated over there than in the UK. Here, our mortgage payments just keep going down and down – but good luck if we ever want to sell up in the next five years! The house next door has been for sale for the past 6 months — and we live in a beautiful neighborhood.
The market is still crazy in Vancouver – although slightly less crazy than a couple of years ago. Bidding wars are still going on though, and if a house is unsold for more than a couple of weeks, you know there’s something wrong with it. The city can’t expand to the North (mountains), West (ocean) or South (US border), so you either build up or East. The commutes to most Eastern suburbs go over bridges that cause major traffic bottlenecks. So properties within the city itself are extremely des res. Plus, as I mentioned, the banks are very tightly regulated, so there’s no mortgage crisis.
Yet.
Ken, we’ll look into the credit union option (I don’t know if they exist here either! I’ve never really had to pay attention to such things. We went with the bank my husband’s been with since his first paper round).
Kristi, I wish I could write those things off too! I don’t envy you your heat though.
Elizabeth, a much less stressful option, I can assure you. Although it does suck to be paying someone else’s mortgage.
If you get feed up, you guys could always sell up and buy a 700 sq ft studio in the building we rent in for a cool half million or more. Mortgages sound confusing and headachy to me, I’m with Elizabeth!
If credit union is the same thing as line of credit, then we have those in Canada
Cath, you are definitely in grown-up territory…this all seems so complicated but they obviously do that for a reason…best of luck figuring this all out and not getting abused by the system!!
Sarbjui, ooh, tempting!
Eva, dunno, I’ll have to ask Richard’s friend!
Trisha, thanks! I think some abuse is inevitable, it’s a matter of degree…
Eva – a line of credit is like a bank account you can borrow against, paying it back monthly (or sometimes just paying the interest owing). A credit union is like a bank, but typically owned by the customers (think co-op). We have them in Canada. They are (or should be) insured by the CDIC, the same good folks who insure your money deposited in “real” chartered banks. Upside – they tend to be more customer-friendly and may cut you good deals or take care of you better. Downside – they are generally smaller and so don’t have the behind them that “real” banks do, which in theory anyway should enable the big banks to give you better deals. Your mileage may vary, E&OE, not valid in the state of Wisconsin, etc.
Elizabeth – don’t think of it as throwing money away. You need to live somewhere, so paying rent makes as much sense as paying into a mortgage (in many cases, a lot more sense, actually).
The nice part about renting is you’re (generally) not paying for upkeep. Think new windows, roof, siding, furnace/AC…