There is no worse feeling than being made to feel stupid by a know it all ‘financial guru’. Calculating a private mortgage should make you feel confident and here is how you can do it too.
Beware The Financial Know It All
Class is in session and there is always that one kid who seems to have all the answers. She grows up and gets an MBA and then becomes a financial bully at the bank.
She talks ‘bank-speak’ which almost no one understands. And when she speaks you begin to doubt yourself.
When it comes to calculating the math of a private mortgage loan (or anything else financial you bring up), her explanations are short and “you won’t understand” is a common statement.
Her intimidation game is complete when your hand won’t go up in class…even if you know the answer.
Calculating At The Head Of The Class
I want to give you a couple simple tools to empower yourself and prove that this ‘Know It All Nellie’ isn’t smarter than you.
- Mortgages Are Not Rocket Science – the banks and the financial ‘powers that be’ have worked very hard to convince us that we are not smart enough to handle our own finances.
I have found with some grade 8 math and a basic understanding of how interest and debt are calculated that most Canadians can figure this out.
- Third Party Validation – sometimes all you need to change how you see yourself is one teacher, mentor, or friend that you look up to that identifies your progress.
We bloom under praise and encouragement and my role is to work with you to ‘get it’ so you can begin calculating with confidence and accuracy.
Find out more about all of things you need to know about your Private Mortgage Made Easy
A Simple Formula To Calculate A Private Mortgage
One of the attractive features of an Ontario private mortgage is that it can be as simple and straightforward as the lender allows. Typically this means that the loan is charged with simple interest only payments.
Quick example: You have borrowed 100K in a 2nd mortgage at 10%. Your interest is calculated at $100,000 X 0.10 = $10,000 / 12 months = $833.33 per month.
If the lender is requiring that you pay back part of the original amount you borrowed as part of the monthly payments then the calculation changes.
These scheduled payments will increase your monthly payment amount however will reduce the balance you owe on your maturity date.
Quick example: You have borrowed 100K in a 2nd mortgage at 10%. The lender has requested a 20 year amortization. Your interest is still calculated at 10% however the payment gets split. $816.48 goes to pay interest and $135.18 goes to pay down the 100K. Your total monthly payment is $951.66 per month.
If you want to punch in some scenarios to get the hang of it you can find a handy tool here at a private mortgage calculator.
Confident Mortgage Calculator
Raising your hand in class only to feel overridden, bullied, or cancelled is embarrassing. It’s also damaging to your self esteem, to your position within your family, and to your financial well being.
Learning the basics and getting encouragement from me along the way will validate you when you present your calculations to your loved ones. Getting the calculations right and hearing well done are worth it. Contact me for help. Your loved ones will thank you!