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Variable Rate Discounts are Back
What does this mean for you and your mortgage?
Over the past week lenders have dropped closed 5-year variable rates back to prime (currently 2.25%) and 3-year closed variable rates to prime - .10 (2.15%). Variable rates saw an increase in premium of up to 1% over the past 6-8 months but we have seen that premium dwindle steadily.
Why did this happen?
With many consumers refinancing their mortgages over the past several months their contract at the discounted variable rates (previously as low as 1.25%) ended. These contracts have now been locked into slightly higher rates relieving pressure on the lender. In addition, we have seen many new buyers in the market over the past few months injecting much needed business to the lenders. This new balance in the market has allowed the lenders to remove the premium on variable rate mortgages.
How can this help you?
If your variable rate mortgage is up for renewal within the next year you may want to consider the following strategy.
We can "blend and
extend" your current variable to essentially buy you some more time in very low
variable rate. By adding a minimum of
$10k-$50k (lender guideline specific) to your mortgage amount, and extending it
out a further 3-5 year term - I create a blended rate for your existing discounted variable and the new prime variable rate.
EG:
current mortgage 90K, maturing in July 2010, rate is PRIME MINUS 0.50% (1.75%) we add
10K at Prime (2.25%) to the mortgage bringing the total principal back to
100K. (the blended rate is
simply a weighted average - the NEW blended rate would
be P-.25%
In order to take advantage of this full
scenario - it would require a penalty to be paid at 3 months interest at PRIME
* (or similar- lender specific).
Call me today to run some numbers on your specific situation.
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Best Rates
RESIDENTIAL MORTGAGE RATES
As of Wednesday Oct 7,2009
TERM
INTEREST RATE
1 year 2.25%
2 year 2.85%
3 year 3.34%
4 year 3.54%
5 year 3.79%
(Quick close)
7 year 5.10%
10 year 5.20%
Open Variable rate 3.05%
Closed 5-year variable rate 2.25%
Closed 3-year variable rate 2.15%
Home Equity Line of Credit 3.25%
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Home Equity Line of Credit
Why are they good for you?
A home equity line of credit is just like a mortgage - it is a registered charge against the title on your home. It is like an open account on your home and you only pay for the amount you take out of that account. You make monthly payments (interest only or a blend of principle and interest) to repay the loan. You can take out this loan against your home to a maximum of 80% of the value. You can make lump sum payments or pay it off - without penalty - it is fully open. These are great if you want extra money for renovations or investing. If you purchase a rental property you can add a home equity line of credit against that home to manage your cash flow.
To learn more - give me a call anytime.
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