Switch to Variable or Stick with 5.00% fixed
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Quote:
Originally posted by dalsania_nh
I have a HELOC with one of the five big banks at prime rate.
By paying down a part of your mortgage from your HELOC you will bring down your interest rate on this part without even paying a penny for penalty.
If you have HELOC at prime might as well consider doubling up your mortgage payments from HELOC in order to take advantage of the lower rates.
This also brings you in a situation where part of your mortgage is at fixed rate and other part is at variable (which in turn is much lower than the fixed rate). Not to mention with HELOC you have the flexibility to pay down any time you want without any penalties.
Every body's situation is different. Not every body would have access to HELOC in addition to a mortgage. For this to happen, the total mortgage plus line of credit should be less than 80% of the value of the property. Secondly, not all banks would give HELOC behind other lender and not all lenders would have the HELOC product in addition to regular mortgage.
Moreover, as INVESTPRO mentioned, if you have not had HELOC earlier, then presently, even if you qualify and the bank has a HELOC product, you may not get the HELOC at prime rate and may have to pay prime plus 1% for the HELCO.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Location: Brampton, Ont, Canada
Posted on: 23-02-09 09:02:18
I GUESS WE CAN GO TO SAME BANK AND DO RE-FINANCE WITHOUT PENALTY - AS INVETPRO SAID , TELL THEM THAT IF THEY DONT REFINANCE U HV OTHER BANKS ARE READY.
if u have good history and have decent credit with good salary - i dont see any problem.
BUT GIVE THEM GOOD REASON FOR RE-FINANCING. - such as u need to pay off loans, or u need money to help family member - IT HAS WORKED FOR MY BROTHER SO MIGHT WORK FOR OTHERS.
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'Some goals are so worthy, it's glorious even to fail.' (Param Vir Chakra awardee Lt. Manoj Pandey)
Duno when was that, but I see a sea change in Banks' attitude now. I have recieved many gifts/ promotions from banks before, but with their squeezing profits, I am experiencing raw deals now.
-Ben
Moderator,
I was just checking to see what 'Report Abuse' was and I clicked that by mistake.
-Ben
My situation is also the same. I have a 40 years mortgage and it's been only an year since I have bought a house(yes, what a sucker I am!! booo..hoooo...). The interest I am paying is 5.9%. Now, I have the same option as others do - variable at 3.8 or fixed at 4.49. Unfortunately, my penalty is coming up more than 10,000 bux. But, even with the penalty added to the mortgage, my monthly payment appears to be reduced by about 150-200 bux.
Does anyone know what's the option for me? Is there any chance the Bank could waive the penalty? I haven't talked to them yet.
an update - I spoke to my lender and also a couple of mortgage brokers about my options.
The brokers flatly said that no other lender would pay the penalty.
One option is to add the penalty to the remaining mortgage (refinancing) which may add lawyers fees as a new mortgage will need to be registered.
The other option is to pay the penalty upfront and switch the mortgage to the new lender (no lawyers fees).
In my case, the penalty is so high that it will take me at least 4-5 years just to recover the penalty & then my savings would start.
My lender offered to "blend and extend" the mortgage. So, they would increase the mortgage term by 5 years and offer me a rate that is a combination of my mortgage rate and the current mortgage rate for a 5 yr fixed mortgage. Sounds good; however, I don't want to be stuck in a contract for the next 8.5 years. There is a good chance that I will be selling my house in the next 3-4 years. I don't want to pay the pre-payment penalty when I sell the house (thus breaking the contract)
I am just sticking with my current mortgage & keep making aggressive prepayments to reduce the interest that I pay to the lender.
Quote:
Originally posted by ash_canada
an update - I spoke to my lender and also a couple of mortgage brokers about my options.
The brokers flatly said that no other lender would pay the penalty.
One option is to add the penalty to the remaining mortgage (refinancing) which may add lawyers fees as a new mortgage will need to be registered.
The other option is to pay the penalty upfront and switch the mortgage to the new lender (no lawyers fees).
In my case, the penalty is so high that it will take me at least 4-5 years just to recover the penalty & then my savings would start.
My lender offered to "blend and extend" the mortgage. So, they would increase the mortgage term by 5 years and offer me a rate that is a combination of my mortgage rate and the current mortgage rate for a 5 yr fixed mortgage. Sounds good; however, I don't want to be stuck in a contract for the next 8.5 years. There is a good chance that I will be selling my house in the next 3-4 years. I don't want to pay the pre-payment penalty when I sell the house (thus breaking the contract)
I am just sticking with my current mortgage & keep making aggressive prepayments to reduce the interest that I pay to the lender.
Blend and extend is essentially adding (loading) of penalty in the interest rate, so that your new rate is lower than your present rate but much higher than any better rate you may get for the same term from your present lender or from any one else. However, when they do a blend and extend, it would be a new 5 year term only (if you go for a 5 year rate) from the date you sign papers and NOT by adding 5 years to your remaining 3.5 years making a total of 8.5 years.
However, you can send me a quick pm with details or call and I will work out the numbers for you to let you know if switching even by paying penalties would make any sense for you or not.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Location: Brampton, Ont, Canada
Posted on: 24-02-09 12:01:31
We have house on two names :
Me and my brother ( 50/50)
Now I want to remove my name and transfer mortgage to my brother’s name – with same bank
Only catch is I am going to add extra 35-40 k when I transfer to his name – I need my share
What is the best solutions ?
When we transfer mortgage from our name to only my brother name – we have to break contract? – is it new contract or we can go with same interest rate (which is prime -.75) or we have to take current mortgage rate which is prim+.8
Do we have to pay penalty? Since we gonna stick to same bank
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'Some goals are so worthy, it's glorious even to fail.' (Param Vir Chakra awardee Lt. Manoj Pandey)
