Average Mortgage Lifespan

38 Months in

Doesn’t mean anything to you? Well it should if you are planning on signing a 5 year fixed mortgage rate in the near future. 38 months is the average when people break their five year fixed mortgages. They could be broken for any number of reasons, marriage, divorce, job loss, job transfer or big promotion. The point is that I want to make the experience of you breaking your mortgage ( if you choose to do so) as painless as possible.

So there are a few things you need to know and I will then explain them a little bit further. Interest rate differential, posted rates, discounted rates and three months interest.

The penalty to break a five year fixed mortgage is either 3 months of interest or interest rate differential, which ever is greater. The formula to calculate out … Read more

To break or not to break?

Well that is the question. Wondering whether to break your current mortgage to take advantage of the lower rates that are currently offered. Well here is an example that you can apply to your situation to see if now is a good time to take advantage of the lower rates.

Interest Rate Differentials (IRD)

Often a client needs an “idea” of how much their existing mortgage penalty might be before he decides to refinance or do an “early switch” with pre-payment penalty.

If the penalty is based on a rate differential, here is a BASIC calculation to figure out a close amount…..

Based on a:

$200,000 with 3 years remaining on a 5 year term of 5.70%….

…because there are 3 years remaining, the current 3 year rate is used to calculate the differential.

If the lenders current 3 year Read more