Posted by: Diane Alvernaz
This week’s ‘Burning Topic’ will be Rising Mortgage Rates in Canada, a hot topic that has many home-owners in Canada talking.
First thing is first, remember to keep some perspective:
Interest rates are still at historic lows and will stay low for a while longer.
10 years ago the avg. 5 yr fixed rate was considered very low at it was hovering around 5%, almost double where the fixed rate was just last week.
Rate hikes come and Rate hikes go:
Money Saving Tip – Secure the lower rate and save your money:
Using the example of a 5 yr fixed rate mortgage of $100,000 amortized over 25 years, the client who followed the above advice would save the following over the next 5 years:
5 year fixed rate 3.29% (RBC today) vs. 2.89% (discounted rate)
Monthly payment – $488.25 vs. 467.62
Approx. monthly savings – $20
Approx. yearly savings – $240
Approx. savings $1200 over the term in after tax income! Depending on your income tax rate, this could be over $2000 in pre-tax income.
On a $200,000 mortgage that is a savings of approx. $4000
On a $300,000 mortgage that is a savings of approx. $6000
If you take advantage of terms and conditions in your mortgage contract such as accelerated repayments, your savings could be a lot more!
Missed last week’s Hot Property? Don’t worry, MonsterMortgage.ca and CP24 have you covered!
Watch the last Hot Property here and get up to date with the hottest topics in the GTA Real Estate and GTA Mortgage market.