Summary
"Every mortgage is different and every situation is unique," [Denis Brunet] said. "There are times when it makes sense, and times when it doesn't make sense."
FIXED OR VARIABLE: The interest rate for a new variable-rate mortgage is usually the bank's prime rate (2.5 per cent at the moment) plus three quarters or one per cent. So that means a rate as low as 3.25 per cent. Interest rates on fixed-rate mortgages are tied to the world's bond markets, and yields didn't come down on Tuesday when the Bank of Canada lowered its trend-setting overnight rate to 0.5 per cent and the chartered banks lowered their prime rates. But even without any reduction this week, the most popular fixed-term mortgage -- a five-year closed -- can still be had for as little as 4.19 per cent, brokers say. [Daryl Harris] said 80 to 90 per cent of his clients are opting for the five-year, fixed-rate. "The rates are the lowest they've been in a generation and they're locking in... The people with less than a 20 per cent downpayment want that security."PENALTIES: There's a penalty to be paid for terminating your mortgage and replacing it with a new lower-rate one. It's usually either three months worth of interest at your existing rate, or the difference between the existing rate and the new rate multiplied by the number of years left on the existing mortgage. For example, if there are three years left on a $100,000 mortgage and the spread between the old and new rates is one per cent, the penalty is about $3,000 ($1,000 a year times three years). So you have to figure out if the money you save is more than the penalty for breaking your mortgage. "Every mortgage is different and every situation is unique," said Denis Brunet, a broker with Mortgage Architects. "So they should have a mortgage professional sit down with them and review their situation." He said a guideline to follow is that if your mortgage rate is more than five per cent, it's likely worthwhile to explore your options.See the full content of this document
Extract
Big Words Lead to Big Savings
Refinancing, consolidation become hot Manitoba trends
Mortgage rates have fallen to levels not seen in a generation, and that has Manitoba homeowners beating a path to their banks and mortgage brokers to take advantage of the new-found bargains.And that was before Wednesday's history-making move that saw the Bank of ...See the full content of this document
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