Look, I don’t advocate paying penalties, however, if there is an obvious savings to be had, then you have to do it. We’ve reached a point where interest rates are so low, it’s worth a review. Here are some recent experiences with real people…. Enjoy.
I had one of my readers contact me about breaking his mortgage… His current mortgage with a good lender.. a Non-bank lender.. his rate is 3.59%. He took a 10 yr term last year. Balance was over $500k. So with 9 yrs remaining, we reviewed his options.
This was a no brainer. Penalty to get out was under $5,000 (lucky he was with a non-BIG SIX BANK). But the savings over the next 5 yrs would be $20,500. His net savings is $15,000. Would you I recommend he break the mortgage? Absolutely!
This is an extreme savings example. And not everyone will see that level of savings.
A second client had $190k remaining @ 3.88% with 7 yrs to go. The net savings after penalty was $8.000. Again, I recommended that my client go ahead and do it. If you are in a mortgage with a rate above 3.20% today, then you could be losing money.
And remember, I’m not even looking at the other mortgage options… If you choose Variable rate, then your savings is even greater given that Variable rate is 2.20% today.. and expected to go down next week. You can also look at the 3 yr fixed rate of 2.49%.
It’s not hard to figure out if this is worth it for you. If you are in a fixed rate mortgage above 3.20%, then get someone to do the math. Speak with an unbiased, independent Mortgage Broker. You might save $$thousands!
WARNING! If your mortgage is presently with a BIG SIX BANK, your penalties will probably be much higher.. and it may not be worth it.. But, you should at least look into it… you never know!
Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.
Steve Garganis 416 224 0114 firstname.lastname@example.org
As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.