Current mortgage rates

Helping you become more financially savvy

Mortgages & Marketing

Written by Jessi Johnson

Monday, 10 January 2011 00:00

You might be asking yourself, how much could a slightly higher interest rate cost me? Let’s put it this way, a rate 40 basis points (0.4%) higher is the currently magical number where we suggest people refinance. At this point it is generally worth it to cancel your existing mortgage, pay the penalty (unless an IRD is charged) and obtain the lower rate. Whereas a difference of 5 basis points (0.05%) really doesn’t make that much of a difference and if it gives you more options, I suggest taking the slightly higher rate.

Here are some quick calculations to show you the difference:

Mortgage	Rate	Amort.	Payment	Difference	Term	Term interest cost	Difference
$250,000	4%	25 years	$1,315.05	$0	5	$46,537.82	$0
$250,000	4.05%	25 years	$1,321.84	$6.79	5	$47,134.05	$596.23
$250,000	4.40%	25 years	$1,369.82	$54.77	5	$51,315.08	$4181.03

There are a few different ways to look at this calculation:

Purchasing: If you are looking to purchase a home and obtain a rate hold today of 4% and the interest rates increases 40 bps (0.4%), you will save yourself over $4,000. In December alone, the 5 year term increased over 40 bps.

Existing owner: If you currently have an interest rate of 4.40% or higher and refinance to 4% (without an IRD), you would save yourself $1431.03. Your penalty to cancel a $250,000 mortgage (without IRD) should be about $2,750. However, if instead you matched your existing payment, your savings would increase further, over $5,000.

Give us a shout for more details.

Own Your Life,

Jessi Johnson
Vancouver Mortgage Broker

Jessi Johnson -
	Mortgage broker Jessi Johnson specializes in educating his clients in phases; starting with buying your first home, debt consolidation & refinancing, how to pay the mortgage down faster, then applying various investment strategies to grow wealth from real estate. After beginning his entrepreneurial career at the age of six… Read More >>
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