Welcome To The Drop Zone
Last week the 5 year fixed gave us vertigo with all of its drops and rebounds. Kicking off with the rock bottom (or so we thought) 2.94 per cent in Ontario, we were in for another nosedive on Thursday, as 2.89 per cent emerged as the new low – and this time it was very nearly nationwide, with almost every province seeing a drop. Looks like Ontario is leading the pack again this week, sporting a new low of 2.88 per cent. And yes, these are full service mortgages, giving you the option to increase your regular payment amount by 20 per cent and apply lump sum payments up to 20 per cent annually.
What’s The Month-To-Month?
As we’ve done with the prior rate drops, let’s take a look at what your mortgage payments would look like at this new low. Firing up RateSupermarket.ca’s handy Mortgage Calculator, let’s assume the following:
- You’re purchasing a home in Ontario at $387,200 (forecasted average MLS resale price for Ontario, CMHC)
- A 5 year fixed rate of 2.88 per cent
- An amortization of 25 years
- Monthly payments
Right off the top, you’ll be looking at a mortgage payment of $1809 a month.
Let’s Mix It Up
For those looking to speed things along, let’s factor in a bi-weekly rapid payment schedule with each payment at $904. Right off the bat, you’re looking at interest savings of $18,769 over the course of your mortgage. Impressive – and you’ll have shaved 3 years off your amortization!
Because this is also a full service mortgage (gotta love those frills), you’ll also have lump sum options to take advantage of. So, should you find an extra $1000 to put toward your mortgage yearly (assuming monthly payments), and the interest saved will be $11,133 and you’ll be mortgage free 2 years sooner.
Now let’s say you can swing both bi-weekly rapid and lump sums payments. You’ll save yourself a whopping $27,504 in interest over the course of your mortgage and you’ll have paid off that mortgage a full 4 years early.