Im not sure if Ill stay in the home for that long, but if I dont, as long as I can port my mortgage with me to my next house, and only get hit by admin fees, Im ok with that ...
Originally Posted by My Own Advisor
What would the switching costs be approximately? I guess I need to factor this in, but only if I switch lenders year after year
Originally Posted by Echo
Just got offered 2.55% 5-year variable, or 2.29% 2-year fixed for a mortgage of 265K in Mirabel, Quebec. I wonder when the prime rate will start rising considerably, and if its still worth betting on the variable terms. Even though the offer is good, I still have to pay $3500 penalty to break current mortgage loan, and $700 notary fees (lawyer fees in Ontario) to leave my current bank.
My current bank forecasts that is will be able to offer a 3.34%/4-year term or better (blended rate due to $3500 covered penalty), or a 2.99%/4-year term if I pay the penalty, when I renew in March 2013.
I did the calculations, and would come out with a mortgage balance which is $900 lower than with my current bank after 2 years. However, in 2 years, the fixed rates could either raise, or stay at these all time lows. So I have to decide if its worth the hassle of switching mortgage to a new bank for an excellent 2-year fixed term, while taking a bet on rates still being low at end of 2-year term (March 2015) ...
Last edited by dcaron; 2012-10-21 at 09:03 PM.
As you stated it all depends on when of if you think the rates are going to go up. I signed into a 2.99% 4 year fixed around six months ago as it was ONE of the best rates i found. I went with a Scotia Total equity plan. The reason i chose Scotia over any of the other banks i looked into is simply their payment options.
The way that we set our mortgage up is by deciding on a very safe biweekly amount. This amount was much less then my gf and i can afford on a bi weekly basis. Our next step was to immediatly increase the payments by the yearly maximum of i think 10%. What this did for us, is if financial hardship fell over us we can at any time during the mortgage, put the payments back down by 10%. The next reason we chose scotia was the "Make a payment, miss a payment" Right now in our situation we double every second payment. Scotia allows you to do this to every payment if you want. Obviously this comes immediately off your principle saving a substantial amount of money over the life of your mortgage. We like the added security of knowing if something were to happen in the next 4 years we can start missing payments, using the doubled payment to cover it, even if it does end up extending the life of the mortgage by a bit.
We are all about paying the mortgage down quicker then normal and scotia also offers the ability to put extra money on the principle, at any time, as many times as you would like up to a maximum %. I cant remember what it is but mine is $50 000 a year. I dont beleive that the doubled payments count towards this amount either.
For us, this is a way of paying the mortgage quickly but still providing a couple safegaurds in the future were something to happen.
I gotta say, i am not a financial person, nor do i have any ties to any bank, or financial institution this just made the most sense to us. I like to be conservative and i like knowing that for the life of my mortgage my payments will not change. I am sure that there may be some people on here that disagree with our way.
Let me know what you think
@Sudstoy: That is a solid plan, and longer amortization than we can afford, with "optional" accelerated payments is exactly what we are planning to do too.
Another thing to consider is that if you move to a bank such as National Bank or TD, you will need to factor in the cost of paying a lawyer to register your mortgage due to these institutions selling collateral charge mortgages. This can potentially wipe out any of the savings that you may get from a better rate as well as handcuff you somewhat again if/when you want to move when it renews later. For this reason, I went with CIBC instead of NB even though NB was offering a slightly better rate.