𝐌𝐔𝐒𝐓-𝐑𝐄𝐀𝐃 𝐢𝐟 𝐲𝐨𝐮𝐫 𝐦𝐨𝐫𝐭𝐠𝐚𝐠𝐞 𝐫𝐚𝐭𝐞 𝐢𝐬 𝐡𝐢𝐠𝐡𝐞𝐫 𝐭𝐡𝐚𝐧 𝟑%. What if breaking your current mortgage will save you money (𝘢 𝘭𝘰𝘵 𝘰𝘧 𝘮𝘰𝘯𝘦𝘺)? Even when you include the pre-payment penalty.
When interest rates fall, breaking your existing mortgage and renegotiating a new one at a lower interest rate can save you thousands of dollars.
𝐇𝐞𝐫𝐞’𝐬 𝐚𝐧 𝐞𝐱𝐚𝐦𝐩𝐥𝐞 𝐨𝐟 𝐭𝐡𝐞 𝐜𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐢𝐨𝐧𝐬…
Interest paid over the next 4 years at 3.49% on a $300,000 mortgage (19-year amortization), with payments of $1,798/month = $38,405. Your balance at the end of the 4 years would be $252,106.
To break this mortgage, assuming the lender will charge a 3-month interest pre-payment penalty, you can expect a penalty of approximately $2,618.
𝐇𝐨𝐰 𝐝𝐨 𝐲𝐨𝐮 𝐜𝐨𝐯𝐞𝐫 𝐭𝐡𝐞 𝐩𝐞𝐧𝐚𝐥𝐭𝐲? We have lenders that will allow you to build in up to $3,000 in penalties and associated switch/transfer costs into your new mortgage. You don’t have to dip into your bank account, and you’re saving money each month – 𝐖𝐈𝐍 𝐖𝐈𝐍!!
So, let’s add the $2,618 penalty to the new mortgage and do the calculations at today’s lower rates…
Interest paid over the next 4 years at 2.79% (*𝘵𝘩𝘪𝘴 𝘪𝘴 𝘢 𝘤𝘭𝘰𝘴𝘦 𝘨𝘶𝘦𝘴𝘵𝘪𝘮𝘢𝘵𝘦 𝘰𝘯 𝘳𝘢𝘵𝘦, 𝘸𝘦 𝘩𝘢𝘷𝘦 𝘩𝘪𝘨𝘩𝘦𝘳 & 𝘭𝘰𝘸𝘦𝘳 𝘳𝘢𝘵𝘦𝘴 𝘢𝘷𝘢𝘪𝘭𝘢𝘣𝘭𝘦 𝘥𝘦𝘱𝘦𝘯𝘥𝘪𝘯𝘨 𝘰𝘯 𝘺𝘰𝘶𝘳 𝘴𝘪𝘵𝘶𝘢𝘵𝘪𝘰𝘯) on a $302,618 mortgage (19-year amortization), with a new lower payment of $1,709/month = $30,849. The new balance at the end of 4 years would be $251,429.
𝐋𝐞𝐭’𝐬 𝐬𝐮𝐦 𝐢𝐭 𝐮𝐩… Drop your payments by close to $90/month. SAVE $7,556 in interest and owe less on your mortgage at the next renewal. Or if you don’t want to lower your payments, keep them the same. You will dave over 1 year of payments on your mortgage as your amortization will go from 19 yrs to 17 yrs 11 mths.
It’s a no brainer with 𝐚 𝐒𝐀𝐕𝐈𝐍𝐆𝐒 𝐎𝐅 $𝟕,𝟓𝟓𝟔!!! 𝐏𝐥𝐮𝐬, 𝐭𝐡𝐞𝐫𝐞’𝐬 𝐚 𝐁𝐎𝐍𝐔𝐒; 𝐲𝐨𝐮 𝐠𝐞𝐭 𝐭𝐨 𝐥𝐨𝐜𝐤 𝐢𝐧 𝐭𝐨𝐝𝐚𝐲’𝐬 𝐞𝐱𝐭𝐫𝐞𝐦𝐞𝐥𝐲 𝐥𝐨𝐰 𝐫𝐚𝐭𝐞𝐬 𝐟𝐨𝐫 𝐬𝐨𝐦𝐞 𝐞𝐱𝐭𝐫𝐚 𝐭𝐢𝐦𝐞!!!
If your current lender allows you to break your closed mortgage contract, you need to contact us today. Send an email to firstname.lastname@example.org or call Rodney 780-960-5897) so you can start saving money. Let us do all the calculating to see if it is worthwhile.
If you want to calculate the savings yourself, download our free mortgage app today. You can do a side by side comparison to find out your best option.