Break That Mortgage!

by Darrin DeRoches May 30 - June 5, 2013

I may not be a mathematician but I do understand when it is a good time to make a move and make money. I have spoken with several mortgage brokers about current rates and where they are going. They are all saying the same thing. If you have a current mortgage over 4 per cent, then it is the time to break it open and re–mortgage. At this point I could pull out some charts or graphs to explain the savings but let me put it in simple terms.     Today’s mortgage rate is as low as 2.79 per cent for a 5 year term so if you are paying over 4 per cent then it is worth it to make the change. Yes there is a cost to break a mortgage but it usually cost about .05 per cent which is nominal. Take this half of one percent and the 1.2 per cent difference it can really make a difference. I renewed my mortgage last year since it was up for renewal and it saved me almost $250 a month. Back then I wrote about it and suggested everyone should take a look at their mortgages and do the same. A year later mortgage companies are now advertising for you to break your mortgage and realize the savings. The reasoning is pretty simple – competition.     The mortgage game is starting to get more and more competition and that is good for the consumer. Some companies will even cover the costs of breaking a mortgage and switching over to them. Some offer free gifts but the best way to go is look for the best deal. The rates are supposed to hold until at least next year but they have to rise sometime and if your mortgage is over 4 per cent you will be renewing when the rates are rising and this is the real problem. You break your mortgage today and take the longest term with the lowest rate. It is generally a 5 year but some companies are pushing the 4 year since they know the rates will be higher then and why give you another year at these ridiculously low rates.     So where do you start? Take a look at your mortgage rate and if it is over 4 per cent then send me an email. I can recommend you to several different banks or brokers who will help you make the best decision and show you not only the savings but the peace of mind that knowing that you will have the best rate possible for the next five years. These brokers will shop your mortgage around and find you the best deal out there. If you are comfortable at your bank then just email me which bank you would like to be at and I can refer you to the best mortgage agent in that bank. I stayed with my bank by simply “negotiating the rate” and by doing this we have a great low rate and they paid all costs. Break that mortgage! V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca.