Saturday, January 17, 2009

Mortgage rate promotions in the GTA

Hello,

Hope you've have a good start in 2009.
I've seen some good news regarding rates in the marketplace: Fixed rates have dropped again.

I've seen some promotions as follows.

3 year fixed rate: 4.25%

1 year fixed rate: 3.99%

5 year fixed rate as low as 4.35%

5 year closed variable rate: Prime rate + 0.45% (3.95%)

Since the fixed rate is quite low, if you are locked into fixed rates at above 5%, you may consider to break the mortage, pay the penalty and save money in the long run.

For example, if you currently have a fixed rate 5% with 3 years left, by switching to 3 year fixed at 4.25%, you will save 0.75% per year, and 2.25% for 3 years.

The penalty for breaking your current mortage is 3-month interest, which is 5%/4 = 1.25% of your outstanding mortgage amount.

Thus you will save 1% of your outstanding mortgage amount for the remaining 3 years. If you have for example a $200,000 mortgage, that would be $2000 in savings.

Let me know if you any questions to ask about this plan and if you want to be put in touch with a mortgage person to help you with this.

Thank you,
Mark

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