Hi Experts,
Need your advice here. My bank if offering me 3.05 Variable and currently I am on 5.00% fixed for 5 years with 3 years term remaining. The penality for for breaking the term and switching to Variable is $3600.00. Principal Balance Outstanding is $290,974.00.
Is it a good option to renew it by paying penality ?
I will be looking to sell this house in 3 years and buy a bigger one.
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You can complain because roses have thorns or you can rejoice because thorns have roses.
Use a web calculator to determine if it's profitable or not.
CMHC has one, so does Bankrate - use Google to locate others.
If you want to "play" with several options and what-if scenarios, use this spreadsheet -
http://milliondollarjourney.com/wp-content/uploads/2009/General%20Mortgage%20analysis%20tool.xls
I'm assuming your current mortgage (as well as the new one you are considering) will be portable to the new house you'll be buying - otherwise the switch will most likely not be profitable.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Quote:
Originally posted by kapilmalik
Hi Experts,
Need your advice here. My bank if offering me 3.05 Variable and currently I am on 5.00% fixed for 5 years with 3 years term remaining. The penality for for breaking the term and switching to Variable is $3600.00. Principal Balance Outstanding is $290,974.00.
Is it a good option to renew it by paying penality ?
I will be looking to sell this house in 3 years and buy a bigger one.
This penalty has been told to you by your bank or is it something you have calculated as it looks kind of on low side. If you ask the bank about the penalties and they calculate IRD then it would be much more.
If you wish to sell this house and buy a bigger one in 3 years, then you should go for a 3 year fix rate close to 3.15% instead of variable which may shoot up after a year or later.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Location: carl sagan's universe
Posted on: 08-05-09 09:52:36
Quote:
Originally posted by pratickm
Use a web calculator to determine if it's profitable or not.
CMHC has one, so does Bankrate - use Google to locate others.
If you want to "play" with several options and what-if scenarios, use this spreadsheet -
http://milliondollarjourney.com/wp-content/uploads/2009/General%20Mortgage%20analysis%20tool.xls
I'm assuming your current mortgage (as well as the new one you are considering) will be portable to the new house you'll be buying - otherwise the switch will most likely not be profitable.
hey nice tool pratick. A bit involved but really cool.
Kapilmalik,
my situation is similar to yours.... so what did you decide?
Considering its end of June now, did the banks give you the same rate?
Quote:
Originally posted by kapilmalik
Hi Experts,
Need your advice here. My bank if offering me 3.05 Variable and currently I am on 5.00% fixed for 5 years with 3 years term remaining. The penality for for breaking the term and switching to Variable is $3600.00. Principal Balance Outstanding is $290,974.00.
Is it a good option to renew it by paying penality ?
I will be looking to sell this house in 3 years and buy a bigger one.
Hi
Yes you will be saving lot , Pls check with bank exact amount of penality ,
Quoting with your mortgage balance outstanding of $290,000.00 , with term of 5 years , amt period 25 yrs , payment bi weekly at 5% mortgage is
$843.33 same at 3.05% is $689.33 difference bi weekly is $154 biweekly three years difference is $12012 , 3.05% variable is not good you can find better rates
