REFINANCING

Should you break your mortgage for a lower rate?

Yes and no. When you break your mortgage contract to renew your mortgage at a new rate and a new term, you're faced with a prepayment charge to reimburse your financial institution for the lost interest income. As a basic rule of thumb, the prepayment charge is based on three months interest or the interest rate differential (that's the difference between you present mortgage rate for the balance of your term and the current rate you want to take out), whichever is greater.

Did you know that most Banks and Lending Institutions offer the worst rate possible when your mortgage comes up for renewal?

In response, you say: "But, they have all my business, they will give me the best rate because I have been with them for years!" -Wrong!

The fact is that each Bank branch acts as a separate profit centre independent of the Head Office. They are rewarded and paid based upon the profitability of their over all mortgage portfolio. They know that most homeowners don't want to go through the hassle of shopping around, and possibly having to re-qualify for their mortgage at a different Bank, so, they offer you a higher rate and hope that you will take it.

Some homeowners are smarter than others, and they negotiate for a better rate. This usual results in a rate that is 0.50 - 0.75% better than what was originally offered in the renewal process. The smartest homeowners call a mortgage broker!

We are able to gain competing offers on your mortgage business and we usually return with a rate that is -1.00 to -1.75% better than your Bank would offer you. That's right, - 1.75% better! This can translate into incredible savings! (See below with only a -1.50% savings)

Imagine saving over $129 per month, and reducing your mortgage by an additional $3,000 in 5 short years!

Here's an example for you to consider:

Bank Renewal Mortgage	Mortgage Broker Negotiated Mortgage
Mortgage Principal: $150,000	Mortgage Principal: $150,000
Rate 5 yr Term: 6 %	Rate 5 yr Term: 4.50%
Monthly Payment: $959.71	Monthly Payment: $830.21
Savings Monthly: $0 / month	Savings Monthly: $129.50
Mortgage Principal at Term end: $134,755	Mortgage Principal at Term end: $131,694
Savings on Principal: $0	Savings on Principal: $3,061 !!!

In addition to a better rate, we can usually tailor fit a mortgage product to your specific needs. We fit a Lender's product to your specific desire to have a flexible mortgage versus a closed mortgage, or a variable term versus a fixed term, etc. We deal with over 30+ Lenders, so options are always available!

Arguably the best reason to use us for your mortgage referral is that we know the secret. Secret you ask? Yes, the secret is that you can secure your mortgage renew up to 120 days before your mortgage actually renews! This often helps you save thousands of dollars in interest. For instance, if your mortgage renews on June 1st, we can secure a new rate for you as early as February 1st. It often happens that rates fluctuate every 60 days, so, you will often be able to get a preferred with us.

Take a moment now, and feel free to contact one of our highly skilled mortgage brokers to help save you money on your renewing mortgage.

Allyson Foulis
Expert Mortgages (Victoria) Ltd.
2600 Rainville Road
Victoria , BC V9B 3N1
Phone: 250-727-7746
Fax: 250-721-5924