Quote:
Originally Posted by janmcn
Who gets away with charging 6.93% yearly interest in this day and age? After paying $1114.87 per year for 30 years, you would wind up paying $33,446.10 plus fees, for the $13,338.17 bond And from what I understand that interest is not tax deductible.
IMO, it would be better to add the cost of the infrastructure into the price of the new homes like a lot of developers do. Obviously, having the bonds separate keeps house prices lower.
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Wouldn't it make more sense to do this on a line of credit or a 10 year loan?
At today's interest (based on 4%) rates, monthly payments would be $135 and the total of principal and interest for the 10 years is $16,400, much less than half the mortgage route. Total interest over the term of the loan would be $2,900 instead of $20,000.
My bank says they could lend at 5% and with the same payments, the loan would be amortized in 16.5 years and the monthly payment go entirely on principal and interest with no yearly fee of $67.00. Even with a rate of 6.93% with same monthly payemts (yearly fee included), I would amortise in 21.5 years.
We are planning to buy a 2/2 Furnished Patio Villa with closing costs of about $150,000.
$150,000 is our limit for a cash deal, so we are going to take on a
1 year term loan for the cost of the bond. I spoke to my Bank, RBC Canada and they can do this, but RBC USA (PNC) say I would need to take out a mortgage for one year on this amount (can't figure out why a mortgage for one year) and it would leave us with a $350 charge for interest for one year.
With a personal loan at 4% I would end up paying $290 interest which is close.
My concern would be, does The Villages Development insist that you use their finance for paying the Bond? And I am assuming I can pay the bond "up-front"