Karine contracted a mortgage loan three years ago and there are two years remaining before the end of the term.

Her mortgage interest rate is 4%. During a discussion with a colleague, she learns that the current interest rates for a 5-year mortgage term are around 3.9%. She is aware that the rates have been low over the last years and worries that the rates might be higher when she renews her mortgage. Could it be a good idea for her to renegotiate her mortgage now and guarantee a 3.09% interest rate and thus save on her current 4% rate for the next two years?

In Karine’s case, she would pay a $1,800 penalty, but save $200 over the next two years and she would benefit from a low interest rate for the following three years.

Karine decided to pay the $1,800 penalty when she renegotiated her mortgage loan, but not everyone has this sum available at no extra cost or interest.

Some might say that the $1,800 Karine paid would have had a higher return had she placed it in an investment or an RRSP than the $200 savings she obtained. That’s true, but the real advantage here is the lower interest Karine will pay on her mortgage for the next five years!

If you want to test the waters, it’s really easy to do so. Just call your bank, ask them what the penalty would be if you repaid your entire mortgage balance now. Then contact us by phone or by email with this information:

• Your mortgage balance
• Your monthly payment
• Your current interest rate
• Your penalty

We can easily tell you if renegotiation would be worth your while and offer you the best rates and products for your needs.