Mortgage payment equal to decreasing rates?

[Daxin]

I've been hearing on the news that the rates have gone down and people with variable mortgages should be happy with smaller payments. Well, my payments haven't changed since the last two decreases in rates. I've called the bank (RBC) and they said that, more money is being put towards the principle and the payments will be the same.

Is this for every bank? Or is there a bank that decreases the payments with the rates.

[Iqoair]

Originally posted by Daxin
I've been hearing on the news that the rates have gone down and people with variable mortgages should be happy with smaller payments. Well, my payments haven't changed since the last two decreases in rates. I've called the bank (RBC) and they said that, more money is being put towards the principle and the payments will be the same.

Is this for every bank? Or is there a bank that decreases the payments with the rates.

Exactly. Our interest rate is 1.5 % on variable right now, yet our payment remains the same with more going to principle. You might be able to change that though, but check with your bank.

[Dr_Funk]

Yes this is how it works with variable rates. If the rate goes down and you keep the payment the same, then more of the payment goes towards the principle.

You do have the option to decrease your payment if you want to keep the same amount going towards your principle. I know RBC allows you to do this since I just did it for my rental house. You do have to contact your bank and sign some paperwork. However, if the rate goes up significantly, you will have to increase your payments so it doesn't mean that your payments will stay the same forever.

[el-nino]

it depends if you are in a adjustable variable rate or a variable interest rates.
If its adjustable then your payments adjust when your rate adjust.

[eljefe]

Originally posted by Daxin
I've been hearing on the news that the rates have gone down and people with variable mortgages should be happy with smaller payments. Well, my payments haven't changed since the last two decreases in rates. I've called the bank (RBC) and they said that, more money is being put towards the principle and the payments will be the same.

Is this for every bank? Or is there a bank that decreases the payments with the rates.

It wouldn't be a radically smaller payment anyway. Unless you are having a crunch in your financials leave it, these increased principal payments will both reduce the interest you pay over the life of the mortgage but also decrease the time until it is paid off.

[Xtrema]

Originally posted by eljefe


It wouldn't be a radically smaller payment anyway. Unless you are having a crunch in your financials leave it, these increased principal payments will both reduce the interest you pay over the life of the mortgage but also decrease the time until it is paid off.

[Godfuader]

Your payments remain the same...more goes towards the principal. Most banks have a 15/15 or 20/20 where you can increase your payments or make a lump sum payment upto those percentages. When you people are getting rediculously low interest for variable...you should max out your payments, because you can slash a ton of principal while the prime stays this low.

[guessboi]

yeah don't drop ur payment unless you have to...you should even up it...
my gf has a 5 yr closed variable at 2.4% now. she is increasing her bi-weekly payments to 500 effective feb 1 this year. If interest rates stays at where it is at right now for the rest of her 24 yr mortgage. She would be done her mortgage in 12 yrs now instead of her 24yrs initially... at this low interest rate, it is the best time to pay off your principle as much as possible to minimize your cost of borrowing.