Originally Posted by

**wind30**
no it does not actually. If the interest rates rises from 1% to 4%, the monthly repayment will go up like 66%, with most of the money going to repay INTEREST in the first few years.

A 40 year loan DOES NOT make sense at a normal interest rate of 4%. This is maths....

Example a 1million 40 year loan at 4% means your monthly payment is $4178 compared to $2528.

But that is not all. After FIVE LONG years payment at 4% interest, your principal has dropped by less than 4% total.... which is plainly ridiculous as almost all your payments is just paying interest. So if you are to sell after FIVE years, you lose basically lost almost all your money spend servicing the loan (they are all interest payments)

It is just maths... if interest rates are low, the penalty for stretching your loans longer is much less.

Perhaps, you can repay for 40 years until you are 75 but is that what you want to be doing?? As it will mean that spending the rest of your life servicing the interest payments. Now at 1% interest rate, the story is so different as the loans are serviced by the rental and you get "free" monthly income.