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Posted on: 05-05-09 16:43:38
Hi Pratick, please check your pm.
After 4 years, with 5.9% my balance would be 289,000, and with 3.6% it will be $286,000. So, the real benefit will be in the 5th year.
I'm replying to your PM 
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Quote:
Originally posted by pratickm
If you have 20% down payment, then make the same down payment on the 3.59% mortgage deal.
3.59 is less than 3.70
Hi Prat & other desis,
In the present situation, what do you suggest?
1) 3.59% fixed for 5 years.
2) Variable open /close
I am just thinking to process the pre approval process and later will decide whether to go for it or not.
Quote:
Originally posted by febpreet
Hi Pratick, please check your pm.
After 4 years, with 5.9% my balance would be 289,000, and with 3.6% it will be $286,000. So, the real benefit will be in the 5th year.
$3k gain over 4year ($289 - $286) doesn't sound a great deal... refinancing cost itself will wipe off most of this gain ....
For sure you should do something about your current 5.9% mortgage, considering all time low mortgage rates.. but this deal does not seem to me a solution... I think you should consult a good mortgage broker...
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Vik
Quote:Yeah, that's what he and I discussed over PM, and there were a few other issues with this deal as well.
Originally posted by vikshr
$3k gain over 4year ($289 - $286) doesn't sound a great deal... refinancing cost itself will wipe off most of this gain ....
Quote:You gotta keep in mind that this is exactly the type of situation for which lenders have the IRD penalty clause in the mortgage contracts.
For sure you should do something about your current 5.9% mortgage, considering all time low mortgage rates.. but this deal does not seem to me a solution...
A fixed term, fixed rate mortgage is like a contract between you and the lender.
They protect themselves by using the IRD.
And since CMHC changed the rules about the 3 mo. interest penalty, it has now become harder and harder to get out of fixed rate mortgages.
Also, the more the rates drop, the higher your IRD penalty will be - that's the whole point.
Which is what makes most refinancing deals not mathematically profitable.
If it weren't so, what good would the mortgage contracts be for the lender if the borrowers can simply walk away anytime by paying couple hundred $$.
They are in the business of making money, you know
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Quote:
Originally posted by pratickm
You gotta keep in mind that this is exactly the type of situation for which lenders have the IRD penalty clause in the mortgage contracts.
A fixed term, fixed rate mortgage is like a contract between you and the lender.
They protect themselves by using the IRD.
And since CMHC changed the rules about the 3 mo. interest penalty, it has now become harder and harder to get out of fixed rate mortgages.
Also, the more the rates drop, the higher your IRD penalty will be - that's the whole point.
Which is what makes most refinancing deals not mathematically profitable.
If it weren't so, what good would the mortgage contracts be for the lender if the borrowers can simply walk away anytime by paying couple hundred $$.
They are in the business of making money, you know
I totally agree...
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Vik
3.15 three years fixed is a really good rate.
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