Comments on: HRTC is nice but paying down the mortgage is nicer

By: hhmmmm?

hhmmmm? — Tue, 29 Jun 2010 19:03:15 +0000

semi-related question.

purchasing a house should i put 20,000, down, or keep half in cash to renovate? house is 80′s all over, in a nice area, but i don’t plan to move soon?

By: ErrorOK » Thoughts on what has happened these past few weeks

ErrorOK » Thoughts on what has happened these past few weeks — Fri, 20 Feb 2009 04:27:50 +0000

[...] Capitalist describes in a post that you shouldn’t go out of your way to make use of the HRTC this year. By that he means that you may have better options, such as mortgage pre-payments or [...]

By: supersocco

supersocco — Mon, 16 Feb 2009 21:42:15 +0000

But, but, but saving money doesn’t help our economy. You’re supposed to go further into the hole to help your fellow Canadians.

By: Friday Links | The Canadian Finance Blog

Friday Links | The Canadian Finance Blog — Fri, 13 Feb 2009 12:13:30 +0000

[...] Canadian Capitalist shows how, if you have $10,000 available, paying down your mortgage can provide a bigger benefit than the maximum HRTC credit. [...]

By: mfd

mfd — Tue, 10 Feb 2009 21:59:03 +0000

Renovations are going to be extremely important now that its a buyers real estate market. Buyers aren’t going to settle for a house that needs a ton of work. The houses that are renovated will move and the fixer uppers will stay on the market forever.

@adam: I’m locked in at 4.89 and I’m happy. If anything I’d be happy to refinance for a 10 year term at the same rate. I can easily make the payments and still have money left over to make accelerated payments. Hindsight is 20/20.

By: HRTC is nice but paying down the mortgage is nicer | No Brainer Profits

HRTC is nice but paying down the mortgage is nicer | No Brainer Profits — Tue, 10 Feb 2009 21:00:29 +0000

[...] Here is the original: HRTC is nice but paying down the mortgage is nicer [...]

By: Adam

Adam — Tue, 10 Feb 2009 19:10:54 +0000

I suspect quite a few people are on fixed rates now. There was that little rate increase back around June last year when everyone locked in. Me included… 5.15% is where I stand locked in now… 2.XX seems like a dream to me!

By: 0xCC

0xCC — Tue, 10 Feb 2009 16:32:55 +0000

I think if you look at the HRTC from a government and economy perspective instead of a tax-payer’s/consumer perspecitve the tax credit makes more sense. The intent of the HRTC is to give the economy a little bit of a push. There are a couple of ways the HRTC achieves this.

First it pushes people that are thinking that maybe they would build that fence this spring/summer but weren’t too sure about doing it because of ‘the economy’ (even though they already have the cash saved up to do it and have reasonably secure jobs in addition to a healthy emergency fund).

Second, it maybe pulls renovation spending from next year into this year. Say some one was planning on replacing the fence in the backyard in the spring of 2010 and was planning on saving the cash to do that over 2009. Now they can still save the cash to do it over 2009 but they can maybe take a small loan or draw on a line of credit to do it this year instead of 2010 so they can get the $1350 tax credit (which should more than cover any interest charges provided they borrow for less than a year and they borrow less than half the amount they spent).

Interestingly we have seen the ‘pull purchases from the future to the present’ scheme in an the economy in the last 5 years. Can you name the industry it happened in? That’s right, the auto industry with the 0% purchase financing deals that started sprouting up about 5 years ago. That hasn’t worked out so well for the auto industry. I wonder how well it will work out for the Canadian government and the home renovation markets. I suspect that some contractors will find themselves run off their feet this summer/fall and having plenty of free time to enjoy the profits they made in 2009 during the summer of 2010.

By: nobleea

nobleea — Tue, 10 Feb 2009 16:01:59 +0000

It would be tough for most people to put money against a mortgage when instead they could have new hardwood or new kitchen cabinets. There’s no immediate benefit from paying down a mortgage.

The HRTC helps me since I was already planning on spending 15K on the house this year.

By: Canadian Capitalist

Canadian Capitalist — Tue, 10 Feb 2009 15:39:06 +0000

EconStudent: Fair enough. But new variable mortgages will typically be prime + 0.6% and a significant chunk still have fixed-rate mortgages. I’ll agree that 5% is probably on the high side but I think an estimate of 2.0% to 2.5% is too low as an average. My guess would be that the actual number lies somewhere in between.

Mike, SP: I would do something about the rotten boards at a high priority as well and classify it as a “need” as opposed to a “want”. Also, for folks in good financial shape, even spending some money on a “want” and having the Government foot part of the bill isn’t a terrible idea. But, I’d wager that a 15% bonus is tempting for many people to spend money they didn’t intend to. Rob is simply saying that there are other ways of saving even more and I agree.