Switch and Save With Rudy

I’d like to share with all you home owners how you can save thousands annually by just switching lenders. Many home owners purchased their homes and at the time their credit score may have been below 650. Over time their credit score increases provided that they make payments on time and keep credit card balances low.

A young couple called my office and explained to me that there were currently locked in a 5 year fixed mortgage and they are finding it very hard to make their payments on time. They explained that their credit was bad and their mortgage rate was high as a result. After about 8 months of working closely and monitoring their credit both scores went up to over 700. At this time I called them in to my office to discuss the next steps.

Their Scenario was:
Monthly mortgage payment: $1,752.52
Current Mortgage Balance: $250,000
Interest rate: 5.8% fixed
Term Remaining: 4 years
Amortization: 20 years

I told them they could switch their mortgage to a different lender who would charge a lower mortgage rate. They would also have to pay a penalty, for breaking their current mortgage, to their existing lender. The penalty in this case was $3K.

I found a lender who would renew them at a variable interest rate of 3.8%. Also with some negotiation the lender agreed to pay the clients legal fee which was approximately $1,200 and the appraisal fee which came up to $400.

I ran amortization tables and compared the total interest paid at maturity and then the total mortgage balance at maturity. Here is what the numbers looked like:

If they were to continue with their current Scenario (5.70%):
Monthly mortgage payment: $1,752.52
Total interest paid at the end of the 5 year term: $ $66,450.36
Mortgage balance at the end of the 5 year term: $ $211,299.16
Possible Scenario (3.80% including $3K penalty):
Monthly mortgage payment: $1,484.86
Total interest paid at the end of the 5 year term: $ $43,507.56
Balance at the end of the 5 year term: $206,346.76

Comparison:
By switching, even with being a charged a $3K penalty, they could save $22,942.80 in interest payments in just 5 years. Also upon maturity of the 5 year term their mortgage balance could be $4,952.40 less. Most important they pay $267.66 less each month, freeing up some cash flow and allowing them to better manage their finances. After reviewing the numbers the choice was obvious, my clients happily signed up with the new mortgage lender.
Call me to discuss how I can save you money; you will be surprised at how much you can actually save.

Sincerely,

Rudy Lochan
416-830-1510
Rudylochan.com
rudylochan@gmail.com
Mortgage Broker at Centum Anava Financing Inc. (Lic # 10414)
Real Estate Agent at World Class Realty Point Brokerage