It is definitely worth a call to a mortgage professional to see if you will! One 5 minute telephone call can save you hundreds on your monthly payment and thousands on the interest you'll pay.
For example, if your current mortgage details are as follows:
Your outstanding balance is: $242,000
Your monthly payment is: $1550
Your remaining term: 24 months
Your current interest rate is 5.25%
Remaining Amortization is 260 months
5 Year Fixed Interest Rate are now as low as 4.1% (Variable are as low as 3.3%)
You are thinking of "breaking" the mortgage in order to obtain a better interest rate.
According to your mortgage contract, you are required to pay the lender 3 months interest as a penalty for breaking the mortgage. Is it worth while to wait for an additional 24 months, and simply renew the mortgage at that time - and take your chances on the interest rate - or is it better to "break" the mortgage, and pay the penalty?
In fact, if you do "break" the mortgage - while you must increase your mortgage principal by the amount of the penalty - an additional $3,200 - you will end up reducing your monthly payment to $1,303 (compared to the old $1,550).
So, even with the penalty, it is worthwhile to break the mortgage because your savings on monthly payments over two years add up to $5,681.
In addition you will knock 3.27 years or 39 months off your amortization.
If you would like to review your current situation, please call Greg at 416 807 7123 or send an email to gbarrow@dominionlending.ca. I would be happy to answer any of your questions and even happier if we can save you money!
Have a great day!
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