Friday, February 10, 2006
So six month after purchasing our house we have received our first Statement. It shows that in that time we have paid loads of cash but our mortgage has only shrunk by tiny little bit. To be specific, almost exactly 3 quarters of our money has been paying off interest and only one quarter has actually been paying off the loan. Obviously I accept that banks need to charge interest in return for loaning us all that dosh, but I certainly now see why folks say the best thing you can ever do is pay off your mortgage early. It's just free money.
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Not only that, but they want you to repay some of the money on the day they lend it to you. That's a bit like this... I ask you to lend me £10, so you do but you want me to give you £1 back immediately. But I need £10, and you've only left me with £9. So I have to borrow £11 to compensate for the fact that you take £1 off me, thus leaving me with the £10 I need but paying more interest than I would have needed to if I'd only borrowed £10. Or something like that.
My lender assurred me "Mr Adams, it's not a racket". I can't remember what I said to them to make them say that. I might have accused them of running a racket. In fact, yes, I did. Money-grabbing ******s.
Consistent anyway...from last year...
Mortgages are a con as well... I remember having a conversation with my first mortgage lender and their reply was something to the effect of "I can assure you Mr Adams, we're not running a racket". So what's the issue? You borrow some money, and on the day they actually give you the money they want some of it back. It's like you want to borrow £10 off me cos you need £10. So I say "okay Ports, but you have to pay me £11 back in total cos of interest". That's fine. So I give you £10 but then say "I want the first £1 back now". Your reply is "but I need £10 right now, and now I've only got £9". The answer is to borrow £11, give me the first £1 back immediately, and then you'll have the £10 you need. The problem is that now because of the increased loan you now have to pay me back even more interest. It's the same with a mortgage... if you didn't have to make the first payment of, say, £800 on the first day, you'd actually have to borrow £800 less.
Ha ha... yes, I did write that last year. No new original material, that's me. I'm still trotting out the same ol' Notes / Domino presentations to customers as last year too ;o)
Ben, you're obviously a fan of my work if you remembered it.
Sadly I have a memory like an elephant...I never forget.
I remember the day back in 1998 that you presented to LCS on life as an SE for Keith Payne's team...I was the new boy asking all the questions. :O)
I agree that it is best to pay your mortgage early so that you will be relieved from stress and from any further legal consequences. You may read this post here to know more about paying loans early.
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