Tuesday, Oct. 04, 2011
Take 5, 10, 15 years off your Mortgage without changing your Payment!
It's been awhile since I've shared some mortgage information, tips, or any advice for that matter relating to financing. My apologies everyone.
There have been a lot of changes over the last few years to the mortgage rules, and for those who haven't been making any changes to their living scenario since 2006-2008 you may not really be aware. Most of the changes have been put in place to help restrict us consumers from getting in over our heads (as did our american counterparts). From an economic point of view our central bank and its policy changes in my mind have done a very reasonable job to control but not hamper.
So for those of you who purchased back in late 2006, 2007 and even into early 2008 the lending environment was different than what is is today. This post goes out to you. Your 5 year mortgages are either right on the cusp of renewal or will be coming up in the next year (or so).
Many of you (myself included) took out 40 year amortizations. It was great because prices were climbing and affordability was quickly coming down, this option allowed for a more tolerable monthly payment. Here in lies the opportunity I want to speak about.
You will be faced with two options at renewal time:
Option 1
Stick with your current lender and roll your mortgage into one of their new rates.
Pro's are:
- easiest thing to do
- your 40 year mortgage now only has 35 years left (notice this in my CON section too)
Con's are:
- you are stuck to the product and rates of your current bank
- you still have 35 left on your mortgage
Option 2
CUT 5 - 15 years of your mortgage and explore the mortgage marketplace with a mortgage broker and find the absolute best fit for you.
Pro's are:
- it's free - mortgage brokers are paid by bank not you
- much better selection of products and rates
- your 40 year mortgage now only has 30 years left
Con's are:
- you new mortgage would be maximum 30 year amortization (notice this is my bolded PRO as well)
Summary:
The the big difference between Option 1 and Option 2 is you can stay with your current bank and maintain your remaining amortization of 35 years, or you can work with a broker to shop the marketplace for the best rate & product up to a maximum amortization of 30 years.
For many of you who took out 40 year mortgages it was to keep the monthly payment as low as possible, but over the last 5 years your financial situation has matured and likely gotten better. So I believe you are perfectly positioned to take the rule change for maximum amortizations and spin it to your favour. The fixed rate mortgages you are likely in right now are in the mid to high 5% range, and today I can get you in the low 3%. Even though we would be condensing your mortgage 5 - 15 years you will still end up with a lower payment or very close to the one you are in today!
For many of us our homes are the largest asset we have and the equity we gain ends up being a major portion of our retirement. This is a major opportunity for you to maintain or reduce your monthly payment and shave a full 5 - 15 years (at least) off your mortgage.
Example:
House purchase in Feb 2007 - $400,000.00
5% down with a 40 year amortization
5 year fixed rate of 5.75%
Your current Monthly payment = $2074
MY SUGGESTION - Mortgage Renewal in Feb 2012
5 year fixed rate of 3.39%
CUT 5 years off your amortization
New monthly payment =$1720 (Savings from current pymt = $354 and cut 5 years off your mortgage)
Or Even Better - CUT 10 years off your amortization
New monthly payment =$1901 (Savings from current pymt = $170 and cut 10 years off your mortgage)
Or lets be crazy here - CUT 15 years off your amortization
New monthly payment -$2208 (Add $140 to your monthly payment but cut 15 years off your mortgage)
Please call me at 403 242 7009 or email directly to dlangille@redlinerealestate.ca to discuss this for your scenario.
Darren Langille
Broker/Owner - Redline Real Estate Financing Inc
- Darren Langille
- Broker/Owner
- 403 242 7009
Tags:
calgary realestate aspenwoods springbank cougarridge westsprings wentworth crestmont discoveryridge bridlewood shawnessy somerset silverado evergreen shawnee slopes coventryhills evanston sagehill panorama hills kincora sherwood royaloak tuscany hansonranch rockyridge valleyridge lynxridge Calgary Realestate mortgage rates fixed variable entertainment Financing Mortgage Savings FortMcMurray Edmonton GrandPrairie RedDeer StAlbert FortSaskactchewan Spurce Grove Vancouver BC Alberta Realestate Financing Investment general Investments Calgary Redline property management sales renovations financings investments management renovations financing investments management