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Is it time to refinance into a lower rate?
Making sense of the numbers.
With all the news about the Bank of Canada keeping rates down - while some rates are moving up it can be very confusing and difficult to make sense of it all. The only way to know what is good for you - is to contact your broker to discuss what is happening, how it effects you and run the numbers for your mortgage.
But - to help you visualize - here is a story about one of my happy clients.
John owns a home in the lower mainland. His mortgage is $545,000.00 and he was locked into a 10 year rate at 5.55% and 35 year amortization. At the time this was a great rate and he wanted security of a longer term rate. But, the longer amortization was costing him in higher interest costs over the life of the mortgage. With the lower rate we turned this around.
Only a year after locking in at the 10 year rate we talked about his options. His penalty to end his current mortgage was 3 months interest or approximately $7,000. That sounds like a lot. But, here's the deal. If he moved his mortgage into a 7-year fixed mortgage with another lender - he still has security for several years and saves big time.
By lowering his rate from 5.55% to 4.6% his payments drop by $400 per month and he saves $40,000 in interest over the next 7 years. The decision to do this is simple. If I asked you to give me $1 and I gave back $7 - with no strings attached - why wouldn't you do it.
It gets better - if John decides to forgo the monthly savings and put that money right back into his monthly mortgage payment -effectively increasing his payments by up to 20% - he saves $50,000 in interest and shortens the mortgage from 35 years to 19 years!
When he renews his mortgage in 7 years with my guidance he could be on track to pay his mortgage off in 1/2 the time he originally thought. How cool is that!!!
Remember - I am paid by the lender - so you can get personalized service and expertise - and no bill at the end.
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Best Rates
RESIDENTIAL MORTGAGE RATES
As of Wednesday November 4,2009
TERM
INTEREST RATE
1 year 2.25%
2 year 3.05%
3 year 3.34%
4 year 3.85%
5 year 3.85%
7 year 4.60%
10 year 5.35%
Open Variable rate 3.05%
Closed 5-year variable rate 2.15%
Home Equity Line of Credit 3.25%
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Getting the credit card monkey off your back.
I help many clients to refinance their mortgage to lower monthly payments allowing them to pay credit card debt off faster and reduce the cost of interest. For some clients the problem is getting a plan in place. When they need assistance I refer them to a professional credit counsellor. One non-profit organization that provides great service - and the article below - is the Credit Counselling Society. For more information, call them at 604 527 8999 or visit www.NoMoreDebts.org to view this article and other helpful tips.
A:
Making the minimum payments on your credit cards will keep you in debt
for a very long time. Based on a balance of $10,000, an annual interest
rate of 18.9 per cent, and only making the minimum payments required
(2.5 per cent), it will take you more than 30 years to pay off the
debt. Along the way you will pay more than $16,000 in interest.
I
encourage you to review your budget to see how much you can afford to
pay each month. Making a fixed payment of $300 every month would pay
off your debt in four years and save you almost $12,000 in interest!
You
also may consider a strategy of paying off the debt with the highest
interest rate first, while keeping the other accounts up to date. Once
the first debt is paid, target the next account with the highest rate
of interest until all your debts are paid in full. This will further
reduce the time it takes to pay off your debt.
The
key to all of these strategies is having a realistic spending plan that
works for you. Seek professional advice if you need help to get started.
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