Manage Your Mortgage
For those who have purchased a real estate or think about purchasing (how to escape unnecessary bustle and save money)
Everyone who has ever bought real estate remembers that important and bother some event. It also concerns not only the choice of the house and the moving itself but the arranging of the mortgage at a favorable rate. Well, at last everything has settled, you have moved, received the mortgage with quite a good mortgage rate – now you can relax and live quietly!
The question is how to live and not to grieve? You need to pay mortgage, so you have much more responsibility. However, there are no unsolvable problems, everything can be gradually decided.
The time of the mortgage renewal eventually comes along. Of course, you remember that the date of the contract renewal is close, but life is so speedy; there are so many things to do that you simply forget about it. As a mortgage is coming up to the renewal date, most banks will send a mortgage renewal notice in the mail – usually one to two months prior to the term expiration. At this time the banks tend to take advantage of our busy schedules to assume that you will sign on with them for another term. The worst part is that the banks only tend to offer you their posted rate with very little or no discount. Almost 60 percent of the public sign this renewal without researching what the competition has to offer. If you renew the mortgage with your bank under the offered interest rates you will overpay a pretty sum of money in a form of additional percentages estimated to cost in the tens of thousands. So, don’t be part of the masses – avoid higher rates, avoid unsuitable products and terms. Certainly, it takes a lot of time, patience and effort
Also, if you have just one month left to find new mortgage you might be upset to realize that not a long time ago, for example, two months before your renewal date all mortgage interest rates were essentially lower. What to do? – we take what we are offered. Life is life.
Here are some statistics numbers.
In October 2008 within a short period of time (several days) all banks changed the formula of calculation of the rate on a variable rate mortgage from Prime Rate minus 0.75% to Prime Rate plus 1%. Thus, if we are talking about two home owners whose renewal supposed to be in the middle of December, depends on the time when they began their renewal process we could find the huge difference between their new mortgage rates. For those, who began the process of renewal in November, a month before term expiration, the new mortgage rate was 5% (Prime=4% plus 1%). For those, who initiated the process 2.5 months prior to the end of term the new rate was approximately 3.25% (Prime mines 0.75%). Let us assume, both homeowners have to pay the mortgage over a 20 year period and the amount of the debt is approximately the same – about $300,000. At 5% the monthly payments will be $1,971 but at 3.25% the payments will decrease to $1,698. It is not difficult to guess that the bank takes the difference in $273.
But even more, you might wonder if you can see what proportion of principal and interest will be those payments.
Assume interest does not change all 5 years.
At 5% interest in the form of bank interest goes $1,237 and repayment of debt $734. During the next 5 years, you will pay to bank $68.417 in forms of interest.
With 3.25% the bank’s interests will be $807 and $891 going to the debt reduction. For next 5 years, the bank will receive from you $43.950 in forms of interest.
The $24.467 difference in the amounts in 5 years the entire income went to the bank. In order to pay this money, you have to earn $35.460 before taxes (we are using marginal tax rate 31% tax, which is present by default).
This loss – a direct result of the delay in applying for a mortgage.
June of 2009.
In a matter of few days, 5-year fixed rate has risen from 3.65% to 4.49%, the rates were practically changing every hour.
October of 2009.
After the June increase on 5-year fixed mortgage rates, gradually, the rates decreased from 4.49% to just fewer than 4%. And again, in a matter of days, it increased to 4.34%.
April of 2010, 3.64% turned into 4.69%.
If you calculate the difference in interest paid with a mortgage amount of $300,000, it is substantial. $300,000 x 1.05% (4.69% – 3.64%) = $3,150 per year. Now multiply that number by 5 years and we are looking at $15,750. Take tax into consideration and that is equivalent of $22,856 in extra income needed over the next 5 years.
May of 2015. Bank, offering the best rates for the self-employed individuals increased its mortgage rates by 0.25%. There aren’t many options for self-employed, therefore, those that came in June or July of 2015 with a renewal in July – August, will pay a higher rate. Those that came to use 4 months in advance, in May, this person will have a 0.25% rate lower mortgage while their situations are same.
Realistically, numbers are not the best.
We are here to offer you the expertise and resources so you can take advantage of the competitive mortgage market. All you need it to be registered for a special program – “Manage your mortgage”. Here’s how it works:
- 120 days before the renewal date we contact you and confirm the best possible rate and product to suit your interests. If within a 4-months period rates go up you already have the best. If the interest rate becomes better you automatically receive the lower one.
- Throughout the remaining years before the contract is up for renewal we follow the changes of mortgage rates in the market. We will offer you the ability to transfer if in your personal situation it is beneficial to change to new conditions, even with penalties.
For every family who has mortgage – we offer you a registration for this interesting and profitable program – no obligations, no fees.
Every family registered for Manage Your Mortgage program will participate in a quarterly draw for a prize of a three night cottage vacation estimated to be worth $650. You can see the conditions here.
For those who are not familiar with the process of transferring a mortgage to another financial institution we just want to inform you that it is a no cost or almost a no cost process. If you don’t change the terms and conditions of the previous contract, such as the amount of the debt and the length of amortization period, in most cases the bank pays for the appraisal and legal expenses. Some of the banks pay $200 towards the discharge fee. So you practically don’t have any expenses during the transfer but you will win as you receive the better mortgage rate.
Let’s sum it up:
- You will have a better mortgage rate at the time of the mortgage renewal in the future.
- During the remaining period of time of the mortgage, before the renewal, we will follow up with the best rates on the market. In case of cardinal changes we will suggests you some movements which will be financially favourable for you.
- You will be always well informed about any important changes in the mortgage industry (we will regularly inform you about any changes of the mortgage rates, and the tendencies in the future, and also about any important financial news).
In order to be registered online you have to fill out the following form below. Please be advised that we don’t request any confidential information.
Now, on to pleasant stuff. You all know what a promotion is. We also decided to promote our interesting program and offer everyone, registered for Manage Your Mortgage, to participate in a quarterly draw.
We have decided to make a noticeable addition to our draw. Starting July 2015, there will be 5 prizes in the draw. The main prize will still be the same – chance to rest with the family and friends at a cottage on Lake Huron. The cash equivalent of such prize is $650 to $950, depending on time of year. 4 additional prizes will be drawn in a form of a gift certificate in the amount of $250, $200, $150 and $100. This certificate can be used at the time of your mortgage renewal, if you are renewing your mortgage with us.
Here is the list of prizes for the “Three Night Cottage Vacation” draw
- Main prize – equivalent of $650-$950 – trip to a cottage within a year of the win (excludes High Season, when the cottage rentals are on weekly basis)
- Second prize – $250 gift certificate*
- Third prize – $200 gift certificate*
- Fourth prize – $150 gift certificate*
- Fifth prize – $100 gift certificate*
* Upon renewing your mortgage through our company, the Gift Certificate will be exchanged for a cheque of the same value.
Detailed terms of the drawing can be found here.
Form that needs to be completed to register for the Manage Your Mortgage program.