Economic forecasters from coast to coast anticipate that The Bank of Canada will keep its key lending rate low. As it has remained unchanged for the past 25 months, it is anticipated that we will see minor changes through late 2013. Estimations are that 2014 will likely see more significant changes, and these changes will be impactful to the general consumer.
Well let’s take a look at an example including the recent changes that we have seen to the amortization effective June, 2012.
If you had a $100,000.00 mortgage at the rate of 2.94%:
- With an amortization of 30 years, your monthly payment would be $417.44
- With an amortization of 25 years, your monthly payment would be $470.14
- The difference is $52.72
If you had a $100,000.00 mortgage at modestly increased rate of 3.44%:
- With an amortization of 30 years, your monthly payment would be $444.35
- With an amortization of 25 years, your monthly payment would be $496.11
- The difference of $51.76
These numbers may seem rather insignificant, but be mindful that the average residential home price in Canada was $368,000.00 in October 2012.
Based on the above information this difference with the amortization reduction and the inevitable rate increase is $78.67 per month x 3.68 = $289.50 monthly increase. Whatever your mortgage goals may be, today or in the future, these numbers are worth paying attention to.
Keeping up to date and apprised of the current market conditions, products and rates via your CENTUM Mortgage Professional, like myself, can in fact save you thousands of dollars. The above example based on a five year mortgage term turns into a savings of $16,346.40 over the sixty months.
Be aware of some of the posted “Best Rates”. If it sounds too good to be true it probably is. This can be the case with a large amount of “special” promotions. They can have tight constraints for early payouts, and in some cases you can’t pay the mortgages out during the term of the mortgage! Reduced anniversary payments and any changes to your monthly payments can command high administration fees.