# Martin's Mortgage Manoeuvre



## MrBlackhill (Jun 10, 2020)

Any mortgage specialist here could confirm that this should work?









Martin's Mortgage Maneuver


How to Avoid Huge Mortgage Break Fees and Take Advantage of Today's Low Rates




martinsmoneymusings.substack.com





Basically, I have a $620,360 mortgage at 2.99% for 5-year fixed, started on May 2019 and ending on May 2024. Current balance is $587,461.16.

From my understanding, I could ask for blend-and-extend which would have low penalty implied and then right away break that new mortgage with also low penalty implied and get a brand new 5-year mortgage at current rates.


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## fireseeker (Jul 24, 2017)

MrBlackhill said:


> Any mortgage specialist here could confirm that this should work?


Lots of discussion about this at RFD.


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## Mortgage u/w (Feb 6, 2014)

In theory, it works. Banks have the worst penalty calculators when it comes to breaking a fixed term mortgage. 

It works best if you have a HELOC in place so that if you increase your loan amount since there is no need to re-register your loan which will set you back solicitor fees. 

Speak with your bank first to see what your penalty will be. Then determine what your planning to do - do you want more money or simply extend your term? 

My personal theory is to always choose a variable rate. You avoid all this headache and guarantee yourself the best rate possible.


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## MrBlackhill (Jun 10, 2020)

I just called and it seems like RBC doesn't do blended rate. F*ck.

And if I want to break my mortgage, it'd cost $31k...



Mortgage u/w said:


> My personal theory is to always choose a variable rate. You avoid all this headache and guarantee yourself the best rate possible.


Yeah, I should've gone for the variable rate, but at the time I took my mortgage, I was unlucky enough to see that the fixed rate had just dropped while the variable rate was moving up, higher than fixed rate. So I chose the fixed rate... It seemed like a good decision for the first year, but then... If I knew about the pandemic...


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## Mortgage u/w (Feb 6, 2014)

Pandemic or not, a variable rate has almost always outperformed the fixed rate. Just look at your penalty - $31k vs $4k had you chosen a variable rate. Reason the fixed is higher is you signed up for a higher return for the bank. So they just want their cut, with some inflation. Virtual lenders would carry a much lower IRD since they post low rates. That $31k would be half with a virtual.

Sucks that RBC doesn't offer blends. They should still offer something should you want to increase your loan amount. Its in their benefit to lend more money.


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## MrBlackhill (Jun 10, 2020)

Mortgage u/w said:


> Pandemic or not, a variable rate has almost always outperformed the fixed rate.


I agree and I've learned my lesson about that.

Unfortunately, I'll have to wait 3 more years to get that variable rate and it's the first 5 years that we pay the most interests, so it's all lost.


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## Money172375 (Jun 29, 2018)

MrBlackhill said:


> I agree and I've learned my lesson about that.
> 
> Unfortunately, I'll have to wait 3 more years to get that variable rate and it's the first 5 years that we pay the most interests, so it's all lost.


Ask that what the minimum mortgage increase amount is and how they would handle it. Usually it’s a blended rate with the new larger amount. You then may be able to just make a lump sump payment with the extra money you borrowed. likely need an appraisal and legal fees, but it may be worth it.


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## KylieJones (Mar 11, 2021)

Is there a mortgage broker to confirm it? If the things shared in the video work, getting mortgages would become very convenient. When I took my mortgage for the house, I made a big mistake, and it was hard for me to pay for it. So to pay it as soon as possible, I have used the services of Home tap. It is a good service for homeowners looking to use their equity to pay off credit cards or other debts without dipping into their savings. This could be an attractive way to lower their overall debt and make their life a little bit easier.


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## m3s (Apr 3, 2010)

This industry is long overdue for disruption and it's coming


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## Eclectic21 (Jun 25, 2021)

MrBlackhill said:


> ... Unfortunately, I'll have to wait 3 more years to get that variable rate and it's the first 5 years that we pay the most interests, so it's all lost.


Maybe in terms of switching to a lower variable rate.

Don't you have the option to make extra payments or increase the payment per biweekly/weekly/monthly?


My friend made their annual extra payment in less than a year of their five year mortgage. The impact for the next payment put her pretty much at the capital owing that five years of mortgage would have paid. The remaining four years are paying off more of the capital as well.


Cheers


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## Mortgage u/w (Feb 6, 2014)

KylieJones said:


> Is there a mortgage broker to confirm it?


To confirm what?



m3s said:


> This industry is long overdue for disruption and it's coming


In your opinion, what's the catalyst that will cause the disruption?

Personally, I don't see any disruption coming.


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