I've only let my mortgage go to full term only once. Breaking and blending is one way to go.. Scotia had me on a 50/50 ratio and it was interesting to see how the variable would change when the BOC would increase rates.. overall the variable paid more principle off.. this was in the early to mid 2000s
This is not how it was explained to me at the bank. I was told the penalty to break the mortgage is equal to the spread un your rate and the current rate, and you save nothing to break it early. They bake it into the new mortgage and you get a lower rate with a big penalty added on and basically the same payment. HOWEVER!!! If you SELL your house the penalty is only 3 months interest. So to get out of the high mortgage without a penalty you have to sell the house and end the mortgage. Buy another house with a new mortgage and lower rate. Then you get a lower payment. This incentive to trade up your house will set the market on fire, the incentive will be better house lower price and everyone will be flipping into a different house to get out of their ass mortgages.
A reasonable financial advise should be don’t over spend money you don’t have. Mortgages are enough debts to handle. Keep getting refinance, or line of credit, or credit card debts is a downward spiral to hell.
I will re lock my mortgages if i think interest rates have bottomed and might go back up. Then its worth paying a penalty to lock low. If i think rates are still dropping i will wait and eat the higher payment and run out the clock until renewal 3 months early with no penalty and a super low rate. Unless the CPI starts going back up again. Then lock it.
Just about to close on our first house this October, and my broker told me I could break my 5 year fixed 4.29% rate when the interest rate decreases next year. Their penalty for breaking the fixed rate is 3months interest or IRD whichever is higher (not calculated using IPD). Do you think this is a good deal?
My renewal is coming in two months, can I take variable at renewal date and convert it into fixed in next 8-10 months? Can I move from variable to fixed in less than one year?
Yes, you can convert out of a variable closed at any time to a fixed rate without paying a penalty the difference is some lenders will offer different terms versus others. Please confirm specifics with your broker/lender.
On November 21, 2023, the federal government announced a new Canadian Mortgage Charter. It said that homeowners with insured mortgages (less then 20% down) aren’t stress tested when they renew their mortgage with a different lender. So you’re not stress tested, but you do still have to qualify (without the stress test) The best way to think of the charter is as a list of "rules and expectations" banks are expected to follow. However, with an uninsured mortgage, you would have to requalify and be stress tested when changing lenders. Hope this helps.
@@TomStorey correction right 3 years meant to say I was going to do the same but then thought nah. I am in logistics and i will go with my stats better then the feds stats and saw this coming.
