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 pre-payment charge is based on three months interest or the interest rate differential (the difference between your present mortgage rate for the balance of your term and the current rate your institution is offering) whichever is greater.
The amount of the pre-payment charge will tell you whether or not you should renegotiate your interest rate. Generally speaking, the smaller the mortgage amount - the smaller the penalty, and the more attractive early renewal becomes. On the other hand, the larger the mortgage amount, the greater the charge, which makes early renewal less desirable.
Since we have information on most lenders, we can easily make the calculations to determine if you should break your mortgage to take advantage of current lower rates. We'll make your decision easy with all the information presented to you after one quick consultation.
When the current discounted rates are lower than your existing mortgage, and the savings are greater than your early renewal penalty, we can notify you of the opportunity to switch your mortgage and save money. It's that simple. You choose when and where you switch your mortgage. There are NO additional fees to you, only a savings in mortgage interest.