“It’s a perfect storm! Rates have never been so low. Our Saskatoon and area market is stable. This current market lends favourably toward both selling and buying. If ever there was a time to take action on purchasing a home, cottage or rental or refinancing for home improvements or simply taking out some of your equity – It’s now. We have truly arrived at a historical sweet spot in our mortgage industry.”
– Pam Gaunt, Mortgage Broker at Sky Financial/The Mortgage Centre.
Buying a home is one of, if not the most significant purchase a Canadian will ever make; therefore, it is crucial to get the best deal possible. Rates on Canadian mortgages are dropping to an all-time low, with some reaching below 2%. Not only do home buyers benefit from these all-time low interest rates, but so do current home owners.
Here are 3 scenarios that affect most Canadians and their real estate investments:
The average sale price of a home in Saskatchewan hovers between $275,000 to just over $300,000, and the typical mortgage is for 25 years. Let’s take a look at 2 scenarios that demonstrate how these all-time low interest rates can put more money in your pocket:
Scenario #1 – 2.99% interest rate
If you were to lock in a 5-year 2.99% interest rate on a $300,000 house, your monthly payments would be $1,418.20. Over the span of 5 years, the projected gross interest payments would total up to $125,495.That seems like a lot of extra money coming out of your future earnings, but that’s the reality of loaning money.
Scenario #2 – 2.09% interest rate
Let’s say you’re going to purchase the same house today but with a 2.09% interest rate. Your monthly payments would be $1,283.42. Then, over the span of 5 years, the projected gross interest payment would be $85,026.
Comparing scenario #1 and #2, there is a difference of $134.78 monthly and $40,469 gross of your hard-earned money. This is why now is the right time to buy. This is why now is the time to seriously consider buying a home or re-think your current mortgages.
How about those who are interested in breaking their mortgage to take advantage of the all-time low rates?
Scenario #3 – Breaking your mortgage from 3.39% to 2.29% interest rate
Rates.ca mocked up a scenario on June 25 to show the upsides and downsides of doing so. In summary, for those who signed a substantially large mortgage in the last couple years, it is worthwhile. In their scenario, the person owed $892,300 with 24.75 years remaining on a 3.39% interest rate. After paying a $32,000 penalty, they obtained a new mortgage at 2.29%, and the person came out ahead by $19,248 over 5 years!
For the entire article, please visit https://rates.ca/resources/should-you-break-your-mortgage-get-record-low-rate/
Any questions? Contact us. We are here for you!
Taylor and Léo
Taylor and Léo
Coldwell Banker Signature