Fixed Rate Mortgages are at all-time lows. Variable Rate Mortgages are proving to be the best product on the market yet again, and The Bank of Canada has all but committed itself to a Prime Rate of 3.0% for the indefinite future.
So, what does this mean for you?
We think you should break your mortgage. Well not everyone. Here are a few tips that will help you decide whether breaking your mortgage makes sense for you.
Your current mortgage should have a rate in excess of 3.5%.
If your mortgage is rate is in excess of 3.5% you will most likely be saving money even if you switch to another fixed rate mortgage. Most clients will find that even with the penalty they are charged to switch to a new mortgage product the interest savings will leave them much further ahead over the term of the mortgage. You can do a quick check to see if you might save money on your mortgage on our amazing Breakyourmortgage.com website.
You should probably be able to handle a little bit of risk.
Just because a few Economists and your Mortgage Broker are telling you that Interest Rates won’t move that doesn’t mean that there won’t be a few bumps along the road. Bond yields and therefore Fixed Mortgage Rates will likely bounce up and down over the next 2 years. At some point you may actually need to lock in before the end of the 5 year term. This can be because your personal situation has changed or because the market is heading in a different direction. The Good News Is: Your with MorCan Direct! We don’t sleep; we watch bond yields, stock markets, economic projections, and monetary policy reports, anything we can get our hands on to leave you ahead on your mortgage. When you lock your Variable Rate Mortgage in to a Fixed Rate you’re getting the Best Rate!
This probably won’t work if your Current Mortgage is with a major Bank.
Ok, here is the dirty little secret. Banks aren’t your friend. They haven’t been built to help you save money. They are there to make money off of you. If you have a Fixed Rate Mortgage with a Major Bank in Canada it is very likely that they are using heavily discounted rates to calculate your penalty, which means you will be subject to an inflated penalty designed to keep you from straying. Here is a report we published on Breaking the Banks Grip on You and Your Finances here.(View Here!)
You might not be able to break your mortgage.
Some mortgages that were recently brought to market prevent the customer from breaking a mortgage. If you have one of these mortgages you might be stuck. One of our agents will be able to discern if your mortgage is one of the more draconian.
Sound, Unbiased Mortgage Advice. From Canada’s Top Independent Mortgage Brokerage