By Holly Collin, Universal Mortgage Architects
If you’re like many Canadian homeowners, you’ve got a little mortgage anxiety – and maybe some mortgage envy -- right now. With advertised mortgage rates edging lower and fixed-rates at historic lows, the grass might be looking greener on the other side. Not surprisingly, many clients are contacting us for advice as to when it is worth breaking and escaping their old mortgage.
Until recently, most homeowners could expect to pay a three-month penalty and draw up a new mortgage at a better rate. However, with rates falling, if you check your mortgage fine print, chances are you’ll find the clause that gives your lender the right to charge a penalty based on the greater of three months’ interest or the interest rate differential (IRD), which is essentially the difference between your old rate and current rates for your remaining term. Since rates have fallen so much, the IRD is often now the larger penalty and the amount is surprising some people.
So is it worth renegotiating your mortgage? For some clients, it can be an important moment of opportunity, while for others, it may just not be worth the costs involved. Most lenders will include the cost of the payout penalty and other costs into the new mortgage so you don’t have to be out of pocket to complete the transaction, as long as you qualify on the new amount of course.
We can help you make a realistic assessment of your situation. Especially if you have a mortgage of more than 5%, it’s worth a professional mortgage analysis to determine if your benefit outweighs the cost and how much the lower payment boosts your cash flow. There’s no cost or obligation. We’re up-to-date on current rates and all of the new opportunities available – from a wide range of lenders – and if there’s greener grass available… we can help you find it.
There’s never been a better time to talk.
Holly Collin - Universal Mortgage Architects
www.hollycollin.com
Our mission is to assist you in finding the best possible mortgage!