Mortgage rates have never been lower. Should you break your current mortgage to take advantage of the lower rates? The answer is ‘yes’ and ‘no’.
YES….if the penalty to break your mortgage is less than the potential savings. We are seeing many opportunities today where it PAYS to break your mortgage and get into today’s lower rates.
EXAMPLE for one client.. Existing mortgage is $275,000. The existing rate is 2.99% with 3 years to go. The penalty to exit is $3500. The current 3 year rate is 2.24%. Gross savings is $5602. Net savings is $2102.
NO… if the penalty to break your mortgage is less than the potential savings. EXAMPLE.. Penalty is $6500 and Gross savings is $5602. Net loss is $898.
YES… if you think interest rates are going to be much higher in the next few years, you may still want to bite the bullet, pay the penalty and lock into a longer term fixed rate mortgage. Everyone is different and has different needs, risk tolerances, plans. This is a personal choice.
I’ve seen examples of both situations. You could save money by breaking your mortgage. The best advice is to speak with an experienced Mortgage Broker. Get an UNBIASED opinion.
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 steve@mortgagenow.ca
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