Recently, a MonsterMortgage.ca agent shared the story of a caller who was in a 10-year mortgage term that they had secured in early 2012 on their first property. Although the caller wanted to get financing on the purchase of a cottage, without even knowing it, they were about to pocket tens of thousands of dollars – on their existing home. The caller (now a euphoric client) had a $500,000 mortgage on their principal residence and a mortgage rate around 4%. They previously chose to go with a ten-year term back in 2012 in order to lock in their monthly mortgage payments for the next decade at what was a fantastic mortgage rate at the time.
What this caller didn’t know is that after the first 60 months or five years of their mortgage, the penalty to break their mortgage is limited to a cost of only three months interest. The three months interest penalty was tens of thousands of dollars cheaper than the IRD penalty their bank had quoted them on a few months earlier.
Unfortunately, despite regular visits to the local branch, no one from the bank had mentioned this fantastic opportunity to this caller. The more cynical among us might suggest that the bank would never recommend taking tens of thousands of dollars in interest from their pocket and putting it into their client’s; however, it’s just as likely that no one was aware of the opportunity.
By breaking his ten-year mortgage term, the caller had the chance to go from a rate in the 4 percent range to a rate in the 2.5 percent range – saving him roughly $33,000 in interest payments and lowering his mortgage principal by $11,000 over five years. But that’s not all…
What did MonsterMortgage.ca do for the caller?
MonsterMortgage.ca helped the caller break their existing ten-year mortgage and moved him into a five-year rate at today’s historically low mortgage rates. The next suggestion was to keep his monthly payments at the same amount as it was when his mortgage rate was at 4 per cent. As he was already accustomed to paying this higher amount each month, he was now paying an additional $400 directly towards his principle – shaving years off of his mortgage. The decision to move was simple, easy and best of all, put about $44,000 in his pocket, not his bank’s…
When was time you looked at your mortgage? Was it at the local branch? Or have you avoided it completely? What if you’re sitting on a small fortune of your own? Fill out the contact form at the top of the page and speak to a MonsterMortgage.ca mortgage expert today!BACK TO BLOG FEED