It’s not all about the rate: Amortization & Renewals
Have you spoken to a mortgage broker lately? When it’s time to renew your
mortgage you have the freedom to do a number of things that are not possible at
any other time without a financial penalty. Renewal time is an opportunity.
Have you looked at your mortgage amortization lately? Let’s say that you started
your present mortgage 10 years ago and you had a 30-year amortization. You now
have 20 years left on your mortgage but your situation has changed. Your
children have grown up and one is ready to leave for college and another one
will follow in a couple of years. An easy way to help the kids out would be to
refinance your home. However, the rules have changed and if the value of your
home has not risen a lot and you have not paid down the balance, you may not
have the 20+% you need to withdraw the equity.
Another possible solution would be to use the amortization on your mortgage to
help you achieve your financial goals.
You can extend the amortization and lower your monthly payments thus freeing up
cash flow.
Here’s an example. With a balance of $400,000 on your mortgage:
By adding 5 years to your mortgage you can lower your payments by $320 a month.
If that’s not enough and you have more than 20% equity , in other words, your
mortgage is less than 80% of the value of the home, you can extend your mortgage
to 30 years with most lenders.
This will free up $520 a month. When your children graduate you or your mortgage
broker can contact the lender and have your amortization lowered again. Note
that changing the amortization can result in costs. Check with your Dominion
Lending Centres mortgage broker before you make any changes to your mortgage.
Call Shoren Konstantin or text her directly at: 416-218-0512. You will be pleasantly surprised!