Just because your mortgage term has not expired, doesn’t mean you cannot take advantage of the low interest rates. Let me show you some numbers, which might help you, think about your current mortgage and how I might be able to put more money into your pocket on a monthly basis.

Client ‘X’ current mortgage

Original Balance – $515,250.00

Outstanding Principal (after 1 yr of payments) – $510,500.00

Amortization – 40 yrs

Interest Rate – 5.02%

Term – 5 yrs

Mortgage – fixed

Payment Frequency – semi monthly

Payment – $1235.00 ($2470.00/month)

By switching to a modest 3.85% fixed 5 year rate client ‘X’ is saving $206,874.12 over 35 year amortization (Please note that 40 yr amortization schedules are no longer offered in Canada), $286.00 per month or $3,432.00 per annum or $17,160.00 over 5 years. There are countless things one could do with that money; pay your property taxes, take a vacation, small home renovation, RRSPs, etc… Remember by decrease the amortization period, even slightly, we allow you to put more of your hard earned money towards the principal and less into the bottomless pit of interest.

If you do consider switching lenders for a better rate and paying out your current mortgage before term maturity, there may be a penalty issued from you current lender and additional closing costs for the new mortgage.