Getting out of my 5 year fixed mortagage

[nonofyobiz]

What are my options here? It's 5 year fixed at 5.59%. With the variable rate just above 2% right now it's prob worth it to just pay out the penalty. Does anyone know what the penalty fee is to get out of that? I have just under 4 years left.

Can you go to another bank and try to get a mortgage through them and just pay off your mortgage at the old bank in order to get out of the current commitment???

I'm feeling very ripped off right now and would even consider selling my house to get out of it.

[Cos]

call and see what your penalty is, then do the math and see if you can actually save any money.

To be honest though, you got 5.59 and you feel ripped off? I wouldnt worry that much about it. Especially not to a point of selling your house just to get out of it.

[broken_legs]

5.59 is a historically low rate. I'm locked at 5.35 and thats just fine.

Last year I checked on my mortgage and I was going to have to pay around 8000 to get out.

You'll have to call the bank and talk to a "mortgage specialist" to find out as every mortgage at every bank will have different penalties and fees.

[autosm]

To get out of mine it was 4500$ that was with a year and a half left. My rate is lower than yours.

You might be looking at 20k +

Even if you sell you still pay the penalty unless you refinance with the same lender for the same or longer term.

[eblend]

if the economy goes up your variable rate will as well, whereas you are locked in for the next 4 years, who knows what can happen, that is the trade off, risk or no risk

[theken]

well, when i checked last my penalty was 19,000. i was locked in at 5.25 or so, got it into the 4's by asking them too. go in and ask your mortgage guy to blend your rates, you will get a little lower rate.

[CHICHARITZHI]

Originally posted by nonofyobiz
What are my options here? It's 5 year fixed at 5.59%. With the variable rate just above 2% right now it's prob worth it to just pay out the penalty. Does anyone know what the penalty fee is to get out of that? I have just under 4 years left.

Can you go to another bank and try to get a mortgage through them and just pay off your mortgage at the old bank in order to get out of the current commitment???

I'm feeling very ripped off right now and would even consider selling my house to get out of it.


there's some mortgage broker that u don't have to pay ur penalty, they will pay out ur bank mortgage and ur penalty..

unlock variable 2%
fixed 5 years 3.1 %

let me know if u are interested so that i can refer u to my friend..

[nonofyobiz]

Originally posted by CHICHARITZHI



there's some mortgage broker that u don't have to pay ur penalty, they will pay out ur bank mortgage and ur penalty..

unlock variable 2%
fixed 5 years 3.1 %

let me know if u are interested so that i can refer u to my friend..

Really?

I called TD tonight and they told me my penalty would be $23,700. :barf:

theken, so they let you kind of renegotiate your rate?

Also TD is offering a %5 cash back mortgage, technically I could break my mortgage, pay the 23,700 penalty, then get 17500 right back. Depending on the interest rate I may recoup the other 6000 in like a year.

[CHICHARITZHI]

Originally posted by nonofyobiz


Really?

I called TD tonight and they told me my penalty would be $23,700. :barf:

theken, so they let you kind of renegotiate your rate?

Also TD is offering a %5 cash back mortgage, technically I could break my mortgage, pay the 23,700 penalty, then get 17500 right back. Depending on the interest rate I may recoup the other 6000 in like a year.


no problem, they will take care of it, just check ur messages..

[Cos]

unless you need the money, dont do it. That is a huge penalty

[masoncgy]

It only makes sense to do it if you come out ahead.

I busted mine open last year and dropped my monthly payments by $400 a month... and at the end of the day, I was going to be ahead of the game by several thousand dollars once all was considered & factored in, so it made sense to break it early and lock it in for 2% less.

[sputnik]

Originally posted by nonofyobiz


Really?

I called TD tonight and they told me my penalty would be $23,700. :barf:

theken, so they let you kind of renegotiate your rate?

Also TD is offering a %5 cash back mortgage, technically I could break my mortgage, pay the 23,700 penalty, then get 17500 right back. Depending on the interest rate I may recoup the other 6000 in like a year.

LOL

The 5% cashback mortgages make you pay the posted rate for your rate. They are NEVER a good deal.

Chances are on a 5 year mortgage you would still be getting a 5%+ interest rate.

[Kloubek]

Talk to your bank and see what the penalty is.

How much it will cost you depends on the amount of the mortgage. But regardless, you can expect it to be a fair amount with 4 years left on it.

Just to ponder: I just moved into a new house. I could have ported the mortgage over (4.9%) to the new house and waited for it to run out in mid October. Or, I could pay the $1500 penalty, and get a new mortgage at 3.4%. In my case, it was cheaper to just pay the penalty. Cheaper by about $700 I think.

Now in your case, you might be able to see an even greater discrepancy between your signed rate and the current rates. But remember - the rates we see right now are at record lows. If you move onto a floating rate mortgage, then you cannot expect to see these kinds of savings forever. And if you go with a fixed rate, then you can expect a rate not AS good as the rates some are getting right now.

So, here's what you have to do:

1) Call your bank, and find out how much a penalty would be
2) Use a mortgage calculator online to find the difference between what you are paying now, and what you would pay for a lower rate.

Then go with whichever saves you the most money.

[bignerd]

Even if you sell your house I thought you still had to pay your payout penalty as you are breaking the contract you had with the bank.....

[Rarasaurus]

^Yes that is correct unless you roll it into your next mortgage with the same terms or a higher amount of money.

[benyl]

Originally posted by nonofyobiz


Really?

I called TD tonight and they told me my penalty would be $23,700. :barf:

theken, so they let you kind of renegotiate your rate?


The reason there is a penalty is because the bank is obligated to pay the interest on the bond they sold to get the money for your mortgage. If you break out of it early, with no penalty, the bank loses money. Banks are not in the business of losing money.

Here is the smart thing to do if you have the ability to do this on your mortgage.

1. Change you payment frequency. TD allows you to go to something called Bi-weekly rapid. Basically this allows you to make 1 extra monthly payment per year (26 bi-weekly payments) and will drastically shorten your amortization period (takes years off a 25 year mortgage).
2. Double your payments if you can.
3. Take advantage of paying 15% yearly toward your principal if your mortgage allows.

By doing the above, you will lower the amount of interest you pay well below the savings you might encounter by getting a lower rate.

[Criticull]

Originally posted by CHICHARITZHI



there's some mortgage broker that u don't have to pay ur penalty, they will pay out ur bank mortgage and ur penalty..

unlock variable 2%
fixed 5 years 3.1 %



Bullshit.

[yellowsnow]

Originally posted by CHICHARITZHI



there's some mortgage broker that u don't have to pay ur penalty, they will pay out ur bank mortgage and ur penalty..

unlock variable 2%
fixed 5 years 3.1 %

let me know if u are interested so that i can refer u to my friend..

uhhh... you might want to clarify that. what stupid broker would pay another bank $20g in penalty fees, and then charge them a ridiculous low int rate.

give me a name and phone number plz

[guessboi]

^ same for me as well.

pm me too since I am in the process of building a new house and will be breaking the 5 yr 5% rate which will have about 1+ yr left when the new house is done.

[sputnik]

Originally posted by CHICHARITZHI



there's some mortgage broker that u don't have to pay ur penalty, they will pay out ur bank mortgage and ur penalty..

unlock variable 2%
fixed 5 years 3.1 %

let me know if u are interested so that i can refer u to my friend..

:bullshit: :bullshit: :bullshit:

a) They don't pay the bank penalty on getting out of the mortgage. They just pay the legal transfer fees (which are usually around $400)

b) No one is offering a 5 year fixed at 3.1% NO ONE. At best you MIGHT be able to get 3.55%

[autosm]

Someone pays the penalty, no way out of it. As said above the bank has to recover its money.

One way around it is to get a line of credit and make the max pre payment amount each year as well as double the payments every month. That way you transfer the loan to the LOC at a lower rate.

To pay 23000$ to go to a floating rate could cost you double if rates go up?

[benyl]

Originally posted by guessboi
^ same for me as well.

pm me too since I am in the process of building a new house and will be breaking the 5 yr 5% rate which will have about 1+ yr left when the new house is done.

Why break it? Just transfer it.

[benyl]

Originally posted by autosm

To pay 23000$ to go to a floating rate could cost you double if rates go up?

Not if, but when.

[Cos]

Originally posted by benyl


Not if, but when.

^^ this, and I suspect when is closer than people think.

I locked in at 3.89 and it jumped to 4.44 after a couple days, so it has already started. Just wait until the BOC raises it rates.

[topmade]

The bank paying off the penalty thing for you is BS!! We've inquired about it before and there is no such thing. You can get it added to your new mortgage, but that's just dumb cause you'd be mortgaging your interest. You can get the cashback ones, but there's always a catch. We ended up paying a penalty a while ago, something like $20k. The wife worked it out and it was worth it to pay and get a lower rate since we were pretty early into our mortage back then. I probably wouldn't go with a variable rate if you are going to pay the penatly because it's a gamble. If you can get a lower locked in rate and still save, then go for it.

[CHICHARITZHI]

Originally posted by topmade
The bank paying off the penalty thing for you is BS!! We've inquired about it before and there is no such thing. You can get it added to your new mortgage, but that's just dumb cause you'd be mortgaging your interest. You can get the cashback ones, but there's always a catch. We ended up paying a penalty a while ago, something like $20k. The wife worked it out and it was worth it to pay and get a lower rate since we were pretty early into our mortage back then. I probably wouldn't go with a variable rate if you are going to pay the penatly because it's a gamble. If you can get a lower locked in rate and still save, then go for it.

who said the bank paying off your penalty? the broker will bail out your mortgage include your penalty. and yes they gonna add up your penalty to your new mortgage . its a good thing for those people who lost their equity for the house and u can get a cash back if u get a approved to your new mortgage that's only thing...


current variable rate 1.9

5 years fixed rate 3.25

[Cos]

Originally posted by CHICHARITZHI


who said the bank paying off your penalty? the broker will bail out your mortgage include your penalty. and yes they gonna add up your penalty to your new mortgage . its a good thing for those people who lost their equity for the house and u can get a cash back if u get a approved to your new mortgage that's only thing...


current variable rate 1.9

5 years fixed rate 3.25

he wants to get out, not out then roll into another one.

[autosm]

3.25 fixed rate is pretty good I have not seen anything lower.

Pm me your guys info mine is up soon.



The diff between 5.59% and 3.25 is more than 40k over 4 years so it might just be worth it. Assuming your mortgage is 400k.

[guessboi]

My banker did a calculation for me and it is more beneficial for me to break it rather than to blend it with the new mortgage.

He mentioned is better to break it than blend 9/10 times.

So from that I am going with a broker than a banker.

Any thoughts?


Originally posted by benyl


Why break it? Just transfer it.

[Mys73ri0]

Originally posted by CHICHARITZHI


who said the bank paying off your penalty? the broker will bail out your mortgage include your penalty. and yes they gonna add up your penalty to your new mortgage . its a good thing for those people who lost their equity for the house and u can get a cash back if u get a approved to your new mortgage that's only thing...



Originally posted by CHICHARITZHI



there's some mortgage broker that u don't have to pay ur penalty, they will pay out ur bank mortgage and ur penalty..



people only misused the word 'bank' for 'mortgage broker' - your first quote still implies the mortgage broker is going to pay off the penalty to get out of your current mortgage.

[mac_82]

.

[nonofyobiz]

Originally posted by Mys73ri0





people only misused the word 'bank' for 'mortgage broker' - your first quote still implies the mortgage broker is going to pay off the penalty to get out of your current mortgage.

That's what I understood

[codetrap]

We broke our deal to get a lower interest rate. Cost us $10100 to do it. They attached the 10K to the heloc, and the 100 came out of our chequing account. However, it changed the payment allocations from 550/700 for interest, to 198/700 for interest. That, combined with our Smith Maneuver, and we've reduced our 25yr to 15yr over the space of 8 months. The repayment time on the penalty was 11 months without anything, but we figure closer to 3 in reality.

I'm pretty happy about that. :D

[nonofyobiz]

Originally posted by codetrap
We broke our deal to get a lower interest rate. Cost us $10100 to do it. They attached the 10K to the heloc, and the 100 came out of our chequing account. However, it changed the payment allocations from 550/700 for interest, to 198/700 for interest. That, combined with our Smith Maneuver, and we've reduced our 25yr to 15yr over the space of 8 months. The repayment time on the penalty was 11 months without anything, but we figure closer to 3 in reality.

I'm pretty happy about that. :D

Explain this maneuver of yours!

[Cos]

Originally posted by nonofyobiz


Explain this maneuver of yours!

http://tinyurl.com/ygkbe56

[codetrap]

Originally posted by nonofyobiz


Explain this maneuver of yours!

http://www.milliondollarjourney.com/the-smith-manoeuvre-a-wealth-strategy-part-1.htm