What woud you do

[adamturner]

I have a Mortgage with BMO, and have 2 years remaining on my term @ 6.5%. Clearly I want out. My penalty will be about $9,000.00 to end the current mortgage.

What are my options here?

Cheers

 

[DenisEncontre]

QUOTE (adamturner @ Aug 8 2010, 11:56 AM) I have a Mortgage with BMO, and have 2 years remaining on my term @ 6.5%. Clearly I want out. My penalty will be about $9,000.00 to end the current mortgage.

What are my options here?

Cheers


The only way to know is by doing the math. If you get a variable rate mortgage say at prime of 2.75% you could save 209.00 per month for every $100,000 borrowed. That is also assuming that the variable rates don`t go up.

 

[Thomas Beyer]

QUOTE (adamturner @ Aug 8 2010, 10:56 AM) I have a Mortgage with BMO, and have 2 years remaining on my term @ 6.5%. Clearly I want out. My penalty will be about $9,000.00 to end the current mortgage.
talk to a mortgage broker .. and get either a fixed rate around 4% or variable around prime - 0.5% .. assuming FIVE years .. possibly increase the mortgage amount to pull out cash and pay for the $9000 penalty.

or: get a LOC only if your intended length of stay in that house is likely going to be less than 5 years.

More details please, namely: what is the house value, what is your 5 year view, what is the mortgage amount ..

 

[johnkord]

A little side question with respect to penalties... : If one gets a 5-year fixed mortgage now at 4.5%, and rates go up to 6.5% in 3 years time (hypothetical only) and one wanted to terminate the loan at that point (in 3 years time), is it true that the "typical" penalty would be around 3 months worth of interest, rather than the immense $ 9,000 penalty in this thread ? .. John

 

[RobMacdonald]

QUOTE (johnkord @ Aug 8 2010, 04:47 PM) A little side question with respect to penalties... : If one gets a 5-year fixed mortgage now at 4.5%, and rates go up to 6.5% in 3 years time (hypothetical only) and one wanted to terminate the loan at that point (in 3 years time), is it true that the "typical" penalty would be around 3 months worth of interest, rather than the immense $ 9,000 penalty in this thread ? .. John

Yes, if the rates are higher in the future the penalty would be 3 months interest. Most banks penalties are worded "the greater of the IRD or 3 month`s interest."

 

[RobMacdonald]

QUOTE (adamturner @ Aug 8 2010, 09:56 AM) I have a Mortgage with BMO, and have 2 years remaining on my term @ 6.5%. Clearly I want out. My penalty will be about $9,000.00 to end the current mortgage.

What are my options here?

Cheers

If you`ve got the equity in the home and/or the cash to pay the penalty, I would expect you would be best off to start looking elsewhere. If you are in the position to qualify and move your mortgage to another lender, you`re even in a better spot to renegotiate with your existing lender.

You can now get 5 year rates at less than 4%, and VRM`s as low as Prime - .7%. There is a potentially large savings for you, and you should be able to recover the interest penalty in the first few year of the new mortgage.

 

[Thomas Beyer]

QUOTE (johnkord @ Aug 8 2010, 05:47 PM) A little side question with respect to penalties... : If one gets a 5-year fixed mortgage now at 4.5%, and rates go up to 6.5% in 3 years time (hypothetical only) and one wanted to terminate the loan at that point (in 3 years time), is it true that the "typical" penalty would be around 3 months worth of interest, rather than the immense $ 9,000 penalty in this thread ? .. John
indeed .. it is usually the HIGHER of 3 months interest or interest differential to maturity (i.e. the loss of future income to bank)

$9000 is not immense if the savings is $25,000

 

[housingrental]

Why was the mortgage at 6.5% from BMO????

 

[Nir]

QUOTE (housingrental @ Aug 9 2010, 09:07 AM) Why was the mortgage at 6.5% from BMO????
because he took the mortgage around 3 yrs ago and fixed rate was in that range then.

 

[housingrental]

Really? Undisconted...? I thought 5.25% not 6.5% 3 years ago....
QUOTE (investmart @ Aug 10 2010, 12:22 AM) because he took the mortgage around 3 yrs ago and fixed rate was in that range then.

 

[TheVancouverLife]

TD CANADA Trust let me renew 6 months earlier than the end of my term without any penalties.

The only condition: as long as I would renew with them.

So perhaps you only have 18 months left in your term? Ask BMO....

Alan

 

[matthias]

QUOTE (ThomasBeyer @ Aug 8 2010, 01:32 PM) talk to a mortgage broker .. and get either a fixed rate around 4% or variable around prime - 0.5% .. assuming FIVE years .. possibly increase the mortgage amount to pull out cash and pay for the $9000 penalty.

or: get a LOC only if your intended length of stay in that house is likely going to be less than 5 years.

More details please, namely: what is the house value, what is your 5 year view, what is the mortgage amount ..

it`s 4 acres with 30 year old mobile fixed to land. purchased for $184000 in 2007. current value $200000 to $220000. remaining balance is $165000

 

[matthias]

QUOTE (adamturner @ Aug 8 2010, 10:56 AM) I have a Mortgage with BMO, and have 2 years remaining on my term @ 6.5%. Clearly I want out. My penalty will be about $9,000.00 to end the current mortgage.

What are my options here?

Cheers

hey buddy...

sounds just like my mortgage...