Are you thinking of breaking your mortgage? With interest rates as low as they are and expected to go higher, this might be your last chance for a long time. But you don’t want to do it if it’ll cause you to pay more in penalties. I’ve already given you an idea of a few things you should look out for. Today, I’m going to give you some online calculators that can help you in your decision-making. But remember, none of these calculators are a substitute for the advice of your financial advisor – just use them to get you an idea of what you should be doing.
Image: Colin / Flickr
A helpful one is the one on the Canadian Mortgage Trends site. As I’ve discussed, if you break your mortgage, you’ll either have to pay the interest rate differential (IRD) – the difference between your current rate of interest and the rate you are changing to – or three months’ interest. To work the calculator, you’ll need the balance of your mortgage, the two interest rates (what you currently pay and what you could potentially pay) and how much time you have left in your mortgage. This is relatively easy to get through your online account.
This calculator will help you determine if you are going to be charged the IRD or the three month’s interest – you’ll likely have to pay the one that pays the bank the most. The factors that will determine this are the amount of time you have left in your mortgage and your current balance.
To actually determine how much you could save, use the mortgage calculator at Industry Canada. Take the amount of money you determined from the previous calculator, as well as all of the other details for your mortgage. The calculator will then tell you if you come out in the black or red if you break your mortgage.
There are other calculators out there – if you get a wide range of calculations, you’ll get a better idea of what your chances are in you coming out on top (some of these calculators will disagree). However, as I said at the beginning, the only person that can really settle these issues for you is your trusted financial advisor.
Heleen Jacobsen
Broker of Record with InfoMarket Group GMAC Real Estate
www.infomarketgroup.com
