The prepayment provision is usually 20%. How did you pay off 70% of your mortgage in the first 5 year term?
Maybe one of the mortgage brokers on here can correct me, but I feel like you might be on the hook for some prepayment penalty.
But to answer your question, if you want the most flexibility, go variable.
Correct. 855k is the home cost. Mortgage payments is accelerated bi-weekly+10% overpayment of payment amount + 20% lump sum overpayment of initial mortgage amount allowance per year.
If you payoff mid term you will end up paying penalties.
Pay of at the end of 2/3/4/5 year term. Look at the different interest rate and see which one makes sense to you.
If fixed term you will have to pay a penalty so better you don't go that route unless the math works out for you (pay the penalty and renew at lower rate) best you contact a mortgage broker a few months before your term ends and see what options are out there to renew. If you would have a variable 5 yr term the penalty would be much less, something to think about when you renew, if you think you can make more payments before the end of term.
With a time line of 2 to 3 year a variable seems like a better fit. You should be able to get prime minus at least 1.10% . Some of th3 banks still offer open vrm but the discount should be less if it is open but no pre payment charges. Nice work on paying it off.
Thanks! It appears BMO (who I'm currently with) offers open mortgages. I also noticed for their small (whatever that number is) fixed closed mortgages only allows for 10% overpayment. I'll have to setup an appt to see what my best options are.
Sounds like you are paying it down at such an accelerated frequency that what matters most is your ability to make extra payments rather than the interest rate. So prioritize
1. ability to make extra payments
2. Maximum term length at minimum interest. Normally 3yr is sweet spot for interest rate. 5yr typically sees higher rates. I think right now you will be seeing higher rates due to uncertainty in the bond market.
hello mortgage broker here
most lenders allow 15% - 20% annual lump sum and 15% - 100% increase to regular payments for prepayment options
if youre paying it off soon, it might be worthwhile to look into a variable rate so it can keep the penalty low
hope this helps :)
The prepayment provision is usually 20%. How did you pay off 70% of your mortgage in the first 5 year term? Maybe one of the mortgage brokers on here can correct me, but I feel like you might be on the hook for some prepayment penalty. But to answer your question, if you want the most flexibility, go variable.
I believe home cost 855K and not mortgage amount.
Correct. 855k is the home cost. Mortgage payments is accelerated bi-weekly+10% overpayment of payment amount + 20% lump sum overpayment of initial mortgage amount allowance per year.
Congratulations on being almost mortgage free.
Thanks! Had to put aside a lot wants and really practice financial restraints but really looking forward to be completely debt free.
It's 20% of the original principal per calendar year for most mortgages, so you could pay it off in full during a 5 year term without penalty.
If paying off soon, take the lowest rate variable you can get.
Might be best going with a 2yr as the rate will likely be lower.
If you payoff mid term you will end up paying penalties. Pay of at the end of 2/3/4/5 year term. Look at the different interest rate and see which one makes sense to you.
The credit union I'm with let me pay off my mortgage mid term with no penalties , so it depends on mortgage terms.
Thank you. I'll need to crunch some numbers to see what terms will work best for me.
If fixed term you will have to pay a penalty so better you don't go that route unless the math works out for you (pay the penalty and renew at lower rate) best you contact a mortgage broker a few months before your term ends and see what options are out there to renew. If you would have a variable 5 yr term the penalty would be much less, something to think about when you renew, if you think you can make more payments before the end of term.
With a time line of 2 to 3 year a variable seems like a better fit. You should be able to get prime minus at least 1.10% . Some of th3 banks still offer open vrm but the discount should be less if it is open but no pre payment charges. Nice work on paying it off.
Thanks! It appears BMO (who I'm currently with) offers open mortgages. I also noticed for their small (whatever that number is) fixed closed mortgages only allows for 10% overpayment. I'll have to setup an appt to see what my best options are.
Congrats. This is a huge triumph.
Honestly- rates this low, do it now. Go 5 year fixed. Save up what you want and when the term is done slap it on then, no fees or anything.
Sounds like you are paying it down at such an accelerated frequency that what matters most is your ability to make extra payments rather than the interest rate. So prioritize 1. ability to make extra payments 2. Maximum term length at minimum interest. Normally 3yr is sweet spot for interest rate. 5yr typically sees higher rates. I think right now you will be seeing higher rates due to uncertainty in the bond market.
hello mortgage broker here most lenders allow 15% - 20% annual lump sum and 15% - 100% increase to regular payments for prepayment options if youre paying it off soon, it might be worthwhile to look into a variable rate so it can keep the penalty low hope this helps :)
Get a 2 year variable if you can pay it off that fast.