2.99% - Who is refinancing?

[Zero102]

I checked with my mortgage broker today and it looks like even though I am only 14 months into a 60 month term the penalty is small enough I'll be able to pay down an extra $3-4k of my mortgage over the 4 years I have remaining by ending my existing mortgage early, taking a 4 year fixed 2.99% mortgage, paying the penalty and making the same payments I am now.

Am I missing something obvious?... is it really as easy as just doing a bit of paperwork now (don't need to re-qualify to stay with the same lender) and I can trim 16-18 months off my mortgage by paying down some extra principal over the next 4 years?

I think it might have a minor impact on my credit rating but really our total debt ratio is low enough and we have a decent enough credit rating that I don't think it will affect any future financing I may need to secure. I understand that if we roll the penalty into the mortgage amount that for the next year or two the principal will actually go up but we aren't planning on moving for many years, 6-8 years at the minimum, so we should run out the term and end up ahead before we have to worry about the principal amount.

Is anybody else planning on taking advantage of these low rates to grind away their principal amount?

[Weapon_R]

Is this with BMO? I've been waiting for other lenders to follow suit so keeping an eye on this. To answer your question, if I could lock in a fixed rate of 2.99%, I'd jump on it because its as good as I've ever seen.

It really is simple to do what you want to do. I've done it a couple times when rates dropped from mid 5s to variable -1, which allowed me to cut my amortization period from ~23 yrs remaining to 16 without any major change in payments.

[stealth]

TD is offering 2.89% Fixed for 3 years. It might be ending soon.

And a mortgage broker told me she can get 2.69% for 4 years... Not sure about that...

[Zero102]

Originally posted by stealth
TD is offering 2.89% Fixed for 3 years. It might be ending soon.

And a mortgage broker told me she can get 2.69% for 4 years... Not sure about that...

What broker is this? That sounds too good to be true.

BMO started the 2.99%/4 year thing but I can see a few other banks that have followed suit, some of them extending their offers out into february, so there should still be lots of time for this. I'm not jumping ship just yet I want to see who else puts up 2.99% rates for 4 years or longer before I make any final decisions.
2.89% is great but 3 years is the problem, I just don't see rates being this low 3 years from now, so at 2.99/4 years I'd have that extra year at 2.99% which makes me feel all warm and fuzzy inside

[Sugarphreak]

...

[Cos]

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[supe]

I have a friend at TD who gave me these details, it is in fact 4 years at 2.99 but because it is a special you have to qualify for 5 years at 5.99. So you have to qualify for more to get less.

[Tik-Tok]

CIBC is offering a 7-Year 3.99% as well...So doesn't that just mean the banks are betting that in 2-3 years, the rate will be even lower?


edit: I'm already fairly low, @3.9% (for another 30 months), switching now would only save me $1200/year, which would be more than my penalty for refinancing early, so I won't be changing, lol.

[heavyfuel]

Originally posted by Zero102
I checked with my mortgage broker today and it looks like even though I am only 14 months into a 60 month term the penalty is small enough I'll be able to pay down an extra $3-4k of my mortgage over the 4 years I have remaining by ending my existing mortgage early, taking a 4 year fixed 2.99% mortgage, paying the penalty and making the same payments I am now.

Am I missing something obvious?... is it really as easy as just doing a bit of paperwork now (don't need to re-qualify to stay with the same lender) and I can trim 16-18 months off my mortgage by paying down some extra principal over the next 4 years?

I think it might have a minor impact on my credit rating but really our total debt ratio is low enough and we have a decent enough credit rating that I don't think it will affect any future financing I may need to secure. I understand that if we roll the penalty into the mortgage amount that for the next year or two the principal will actually go up but we aren't planning on moving for many years, 6-8 years at the minimum, so we should run out the term and end up ahead before we have to worry about the principal amount.

Is anybody else planning on taking advantage of these low rates to grind away their principal amount?

When I read stuff like this and have to reach for some Advil, that's where I'm glad I'm renting..

[Toma]

Open variable. It's usually at Prime minus 0.25 to .75

I think I enjoyed under 2% a while back.

But looks like many lenders trying to phase out open variable, or make it less attractive. That sucks. Even now, I am Open Variable, and think I pay 2.4 (prime -0.6)

[in*10*se]

prime -.835 hsbc refinanced dec/jan of 2011/2012

[JBreaks]

Banks barrow the cash to lend today at a fixed rate and would benefit massively if the posted rate was to increase and you were on a variable rate. The fact that they are now pushing the fixed rate mortgages is a massive indication of their analysts rate outlook during the next 5 yr period.

[Sugarphreak]

...

[Toma]

Originally posted by JBreaks
Banks barrow the cash to lend today at a fixed rate and would benefit massively if the posted rate was to increase and you were on a variable rate. The fact that they are now pushing the fixed rate mortgages is a massive indication of their analysts rate outlook during the next 5 yr period.

Historically, variable has proven to be the best.

A lot of it is because if you could get a variable at 2.5, that means a fixed was 3.75 or more. That's a very big swing, and unlikely to happen soon enough in a 3-5 year term to leave you in the negative at the end of the term.

When interest rates first dipped under 8% swarms of people were trying to lock in for 5 to 10 years..... "Interest hasn't been this low in decades", "cant hurt to lock in", "interest rates will only go up"..... that was the mentality.

Ditto when rates were skyrocketing to 20%. People wanted to lock in at 20% for 5+ years cause "rates are headed to 25%, or more!!"" lol

Human emotion and fear gives the banks a "win win" in selling fixed rate mortgages at a premium in any market lol.

With Canada wide real estate looking like its going to shit the bed (everywhere except Alberta and Sask), rates ain't goin up.

Plus the freedom to do anything you want, sell your house with no penalty, change lenders etc.

[Toma]

Originally posted by in*10*se
prime -.835 hsbc refinanced dec/jan of 2011/2012

Damn, that's NICE! They musta just brought that back, cause last year or maybe 1.5 years ago, they would not have done it.

[Sorath]

damn! i just renewed my North house for 3.09% fixed 5 year through atb in december. Thought that was pretty good and wasnt gonna get better

Up for renewal on my townhouse. been enjoying .9 below prime. hopefully this is still available come spring time. Doubt it though

[Skyline_Addict]

Sorath is a baller

[el-nino]

Sorath, 3.09 is still pretty good.
In my opinion, BMO's 2.99 is way to restrictive.
Check it out….
The main terms of BMO’s special are as follows:
• Maximum Amortization: 25 years
• Rate Hold: Up to 90 days
• Pre-Approvals: Allowed
• Lump-sum Pre-payments: 10% maximum per year (1/2 of the 20% that BMO normally allows)
• Optional Payment increase: 10% maximum per year (again, 1/2 of the 20% that BMO normally allows)
• Term: Fully closed unless you sell the property, refinance (with BMO only), or early renew into another BMO mortgage.
• BMO Mortgage Cash Account: Not available with the Low-Rate
• BMO Skip-a-Payment: Not available with the Low-Rate
• BMO ReadiLine: Not available with the Low-Rate
• Other Details: Not applicable to non-owner occupied rental properties

Most importantly, client is tied to BMO for the entire 5 year term of their mortgage, even if they want to break it and pay a penalty, they are forced to stay with BMO. Client loses negotiating power.

On the other hand, you can't deny that 2.99 at 5 years is an amazing deal.

[sputnik]

Originally posted by Sorath
Up for renewal on my townhouse. been enjoying .9 below prime. hopefully this is still available come spring time. Doubt it though

Give your lender a call.

Most will let you renew early or at least hold the rate.

[Sorath]

that was through firstline back in 07. the mortgage itself isnt due till august. i think i can do 3 - 6 months to hold the rate. We'll see what happens