Do you want a better mortgage than one you already have? You can only imagine the number of inquiries I get because someone wants a better rate than the one they are currently paying. (Especially when I'm offering Bon Jovi tickets as a thank you) But just hold on there. Every-time you ask that question you are setting yourself up for some serious money losses. There are some important details you need to concern yourself with before you break a contract with your current lender.
!) Balance of Your Mortgage - no ball, parking! Get the exact amount and learn where you can get your hands on the information anytime you want. Most mortgage balances are available on line from your lender.
2) Maturity Date - It's important to know when you mature. Okay all kidding aside you must know when your current mortgage term comes up for renewal. This date makes a lot of difference in determining your penalty and your actual savings. You also need to know how many payments you have remaining. Are you making monthly or bi-weekly payments? There is a difference.
3) Monthly Payment - Again, no ball parking! Get the exact amount.
4) Current Mortgage Rate - Don't ball park it! The exact number is very important in helping you determine how much you will save. A mistake of .05% can make a huge difference.
5) Remaining Amortization - this is a tough one but so important. You need to know under your current payment schedule exactly when will you be mortgage free. This number is so important. Mortgage Lenders don't make money based on your interest rate, they make money based on how long you take to pay off your loan. If you have less than 10 years left on your mortgage a 1% saving on your rate may not make that much difference.
6) Terms of prepayment. Get to know what your current lender expects for a penalty if you leave your mortgage before the due date. I think you should consider this when you first get your mortgage but so few people ever think to ask. If you got a car pool bragging rate on your mortgage the back end maybe pretty restrictive in terms of paying off early. We've all seen the articles in the newspaper about the $1,000's some poor person paid their lender in mortgage penalties.
In case you loose interest (no pun intended) continue reading here. Once you have this information you should learn where you can get your hands on it easily. Every-time the mortgage rates change and after every payment you make the numbers will change. A good quality amortization schedule should show you how much it's actually costing you to break your mortgage. Make sure your mortgage broker works out the numbers for you before you follow through with an application. There should be no surprises.
You can work the numbers out yourself on this calculator provided by Industry Canada. I personally love this tool. So if the numbers don't work out in your favor but you still want to see Bon Jovi then let us keep your mortgage info on file and visit it at renewal and we'll put your name in our draw for tickets. We will keep drawing names until all the tickets are gone. Just because it doesn't work out just now for you doesn't mean we don't want to party with you! Whenever the time is right "I'll be there for you" and any other bad Bon Jovi pun you can think of. Keep smiling.
P.S. - if the mortgage calculator has you totally confused then let me know and I'll work out the numbers for you.
Fantastic post Marcy and extremely helpful.
ReplyDeleteThis is a great post. Thank you!
ReplyDeleteA further note (or story) about breaking terms. When we bought our first place we ended up having to break our term on it. On the flip side when we signed our mortgage contract we asked the girl what would happen if we broke it and she explained that we would have to pay 3 mortgage payments. This didn't seem bad to us so we signed the contract.
Almost 2 years later we needed to break the contract. Called the bank and low and behold the woman was wrong. It was a lot more then just 3 months mortgage payments.
Yes we should have understood the contract better but the woman should not have told us what she did. She was even a veteran at the bank.
In the end we learned a lot. Bitched up a storm with the bank. I would suggest if you live in BC never to use Vancity Credit Union. Nothing but problems with them.
You're right Patty. I wish I had a dollar for every-time I've heard this story. the problem is the people at the bank are judged and graded on the # of transaction they process not on your satisfaction 2 years later. It's just the way it is and the only thing that can make it better is smarter consumers. Never stop sharing your story.
ReplyDelete