# CIBC mortgage question



## balk (Dec 6, 2010)

Hey all, 

I currently have a mortgage with CIBC at 3.69% and it has three years remaining. Do i have any options Apart from breaking my mortgage and signing a new one?

I would love to take advantage of the low rates.

Thanks,

Balk


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## Shayne (Apr 3, 2009)

Call them and find out if they will give you a blended rate. This could save you some cash. If you are also able to post all your mortgage information and the penalty amount I will be able to tell you if you can save some $$$ by paying the penalty and taking a new mortgage.


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## balk (Dec 6, 2010)

Thanks for the reply. How does blending work? If I have three years left, could I blend with a three year or do I have to blend with a term similar to what I started with?

How is the new rate determined? Lets say I have 3 years left at 3.69% and the new rate for 5 years is 2.85 and three years is 2.75. If I would blend with the five years would I be looking at five more years of 3/8*3.68+5/8*2.85? Likewise for blending with a three year would it be 1/2*3.69+1/2*2.75? What incentive do they have to blend with a three year term?

Thanks,

Balk


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## Ponderling (Mar 1, 2013)

Do not forget the most powerful ability, make principal prepayments. Most mortgages let you prepay 15% per year.

This could save you more than any costs to blend and extend. Consider the break cost, and then go open, save at the closed rate, and make principal prepayments with that difference and every other penny you can scrape together to make the annual prepayment lump sum. 

This strategy took many years off the repayment schedule of our mortgage while the bank held it.
There were some very lean years when the kids were little, but kids between 1 and 6 do not know that they are missing out on vavctions that mom and dad used to take.
Sticking with low cost family close to home vacations, we dumped loads into the mortgage principal amount outstanding in those years.


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## My Own Advisor (Sep 24, 2012)

Good call Ponderling. We will attempt to increase our mortgage pre-payments, later this year. I hope to be mortgage free in 9 years. Can't friggin' wait!


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## Shayne (Apr 3, 2009)

balk said:


> Thanks for the reply. How does blending work? If I have three years left, could I blend with a three year or do I have to blend with a term similar to what I started with?
> 
> How is the new rate determined? Lets say I have 3 years left at 3.69% and the new rate for 5 years is 2.85 and three years is 2.75. If I would blend with the five years would I be looking at five more years of 3/8*3.68+5/8*2.85? Likewise for blending with a three year would it be 1/2*3.69+1/2*2.75? What incentive do they have to blend with a three year term?
> 
> ...


Normally they will extend your term. Blend the 3 years you have left with a new 5 year term.

The rate is determined internally. You have to find out what your blended rate and term is and the penalty. You can then figure out if the blend and extend works or if you are better to pay the penalty and get the best rate.


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## Shayne (Apr 3, 2009)

Ponderling said:


> Do not forget the most powerful ability, make principal prepayments. Most mortgages let you prepay 15% per year.
> 
> This could save you more than any costs to blend and extend. Consider the break cost, and then go open, save at the closed rate, and make principal prepayments with that difference and every other penny you can scrape together to make the annual prepayment lump sum.
> 
> ...


Two different concepts, but I agree that people must be educated on the power of prepayments!!


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## lonewolf (Jun 12, 2012)

balk

Make sure you use a magnifying glass to read the fine print. Not joking, a while back market place did a program on how Canadian banking fees were ripping everyone off. The fine print on some of the mortgages could not be read without a magnifiying glass which resulted in people getting ripped off because they never knew the fine print was there. The fine print benifited the bank & not the customer. This is one reason Iam not a fan of banks & prefure credit unions.


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