Lower your mortgage payment with a mortgage renewal. Did you know that it is possible to renegotiate your mortgage loan during the term by renewing your mortgage before the term? Doing so saves money. You can make money, sometimes a lot. Here’s how to take advantage of lower rates to lower your mortgage payments.
Mortgage renewal: a practical example of lower interest rates
Take the example of Sarah and Paul to illustrate the value of mortgage renewal:
- They bought their house in October 2016
- The term of their mortgage is in 2021
- Their current mortgage is $ 467,000 at 2.69%,
- Their payment is $ 2,136.00 / Month.
Today, anticipating the renewal, Sarah and Paul get a fixed rate of 1.84% over five years. Their monthly payment drops to $ 1,716.00 / month.
Or $ 420.00 in monthly savings
The potential savings they can achieve over five years is, therefore, $ 25,200.00
Customers know that interest rates are historically low; they don’t want to risk waiting for fear that they will go back up to the deadline at the end of 2021.
This is an advantageous situation: the new loan’s interest is lower than the prepayment penalty.
When can I save on my mortgage
Several factors go into determining whether you will be able to save on your mortgage with a renewal. Among the criteria that weigh are the remaining term, the bank, the initial rate, and the penalties of the contract.
We are at your disposal to advise you on the best strategy to adopt. We will be able to quickly confirm whether it is in your interest to anticipate the date of your renewal.
Ideally, when you call, you should have the following information on hand:
- Your mortgage balance
- Your monthly payment
- Your interest rate
- The amount of the penalty to be paid (which you will get by contacting your bank.