Question by Chris O: With Rates Falling At What Point Do I Re-Negotiate My Mortgage? We have 4 years left on our 5 year term of 5.1%....there is still 208k left on our mortgage, the table looks like we should have it paid off in 18 years. With rates the way they are, how do I figure out what point it makes sense to pay the penalty and re-negotiate my mortgage rate early of the renewal? This is a Canadian question, and RBC is the lender if that helps. Best answer for With Rates Falling At What Point Do I Re-Negotiate My Mortgage?:
Answer by BillWill3
Given that you have 4 more years at the current, low interest rate and would then have only 14 years left on the mortgage, the best answer likely is to NOT consider refinancing at all during the fixed rate period. Even if you were able to get a lower interest rate, the payment of penalties to refinance along with additional closing costs would require a significant amount of time to recover these expenses at the lower rate. A much better solution would be to apply the closing cost money and penalty money, along with any other funds you may find available, to make extra principle reduction payments. Even a modest extra amount of 5% to 10 % of the total monthly payment paid each month can reduce your eventual payoff considerably. With not much effort and consistently paying a little more toward principle each month, you could have about 10 years or even less left on this loan when the fixed rate ends. If the rate resets to a higher level, the amount remaining will be significantly smaller, thus the total remaining interest paid would not be a major concern. And if you did decide you wanted to refinance at that time, your options are much better as you would have lots of equity and the term would be very short, making the loan attractive to many lenders.
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Experts from Canada's Leading Mortgage Brokerage Talks about Creating a Win-Win Situation for Home-Owners Despite the current mortgage rate and red hot housing market in Canada, many homeowners still fail to find a better deal for mortgage renewal. SMI Industry Experts Share Tips On Strategizing the Best Deal before Mortgage ...
Due to the recession last few years for every investor have not been good. Canadian housing market was not much affected in this recession like US and other nations. The surprising increase in home sales in the first quarter of 2010 is Canada was due to high demand of houses, low inventory levels and significantly low Canadian mortgage rates. During the first quarter of 2010, the mortgage rates in Canada were notably low. There can be many reasons on which the market price of a house depends.
What is new in the upcoming Canadian housing market? The home prices are no longer expected to remain the same. Therefore, many buyers are found rushing to make bids or multiple offers in order to avail best mortgage rates Canada where buyers are less. Less people in a bid may result in availing house at low rates. Even if there is an increase in the mortgage rates in the second half of the year, availing home might be affordable if you start saving some money from now.
It is unpredictable on what will happen to the Canadian economy and the interest rates in the next 19 months. It is thought that the variable and fixed interest rates offered by banks may increase. Lowest mortgage rates in Canada may change within one night. There are many banks that are forecasting about the rates. Some banks suggest that the interest rates will go higher with the end of the year ranging from 2.5% to 3.17%.
But do not worry as this cannot be proved. There are several factors on which the economic financial conditions depend. Besides the prices, there are many more things that you should consider before choosing the lender. A Canadian mortgage broker can help you in finding low rates. You must select an experienced mortgage broker who has previously dealt with many cases which are similar to yours. Although a broker may charge you his brokerage, but it would be very difficult to deal in such cases without a broker. With their wide network of money lenders, a broker may surely find a lender based on your situation. Suggest Canadian Mortgage Rates At The End Of 2010 Issues
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