This isn’t a trick question.  Many of the big banks in Canada this week are offering 120-day locked-in pre-approvals/rate holds of 5.7% or higher.   There isn’t any reason for a borrower to agree to pay more.

Before we get into the large sums of money that can be saved, I wanted to take a moment to mention the virtues of using a mortgage professional.

1.  If rates go down during your pre-approval period, we will automatically get the lower rate for you.
2. When you purchase a home we will again shop your rate around to all of our 20+ lenders.
3. We are going to review all of your documents up front, check your credit, and about 140 more items to ensure your pre-approval is as bonafide as it can.

These three features on their own should be enough to convince anyone to use a broker.  But WAIT!  THERE’S MORE!  There are massive savings that you can realize as a borrower.

Our average mortgage size over the last 3 months has been $330,000.00.  Let’s compare 5.7% vs 5.14% for a 5-year fixed insured mortgage rate over a 25-year amortization.

$107/month lower payments.
$8,906 less interest paid over 5 years.
$2,474 more principal paid over 5 years.

The savings are substantial.

What happens if you apply the $107/month payment to the principal each month (an apples-to-apples comparison)?

The payments will be the same ($2,053 per month if you’re wondering).

$9,779 less interest paid over 5 years.
$9.767 more principal paid over 5 years

But WAIT! THERE’S MORE!

If you simply increase your payments to match there is an added benefit that the amortization of your mortgage drops from 25 years to 22 years and 7 months.

It really pays to speak to a mortgage professional.  We can help you save $1000s of dollars in unnecessary interest and fees!

Contact us today!