How much will I save? 5 year fixed: 2.72% vs 1.79%
Current mortgage is $216,000 owing at a 5 year fixed 2.72%
New rate 5 year fixed at 1.79%
How much am I saving over the 5 year term? I pay bi-weekly if that makes a difference.
Aug 29th, 2020 8:05 am
Aug 29th, 2020 8:39 am
Aug 29th, 2020 8:42 am
Aug 29th, 2020 8:49 am
Aug 29th, 2020 8:52 am
Aug 29th, 2020 9:04 am
Aug 29th, 2020 9:18 am
Aug 29th, 2020 9:35 am
Thank you so much! This is exactly what I was looking for! So if I put the extra interest saved towards the principle on a regular basis then the balance after 5 years would be around $145,000 right?Nukey wrote: ↑ You haven't quite posted enough information, but a new $216,000 mortgage with a 15 year amortization and bi-weekly payments @ 2.72% would result in a payment of $672.24 bi-weekly. Total interest over a 5 year term would be $25,023.00 and the balance at the end of the term would be $153,631.80.
The same new mortgage @ 1.79% would result in a bi-weekly payment of $629.75, interest of $16,344.24 and an ending balance of $150,476.74. The interest savings is $8,678.76. The additional principal paid down is $3,155.06.
Aug 29th, 2020 9:38 am
Aug 29th, 2020 11:49 am
Aug 29th, 2020 12:43 pm
Aug 29th, 2020 7:06 pm
A little confusing but thank you!padu2004 wrote: ↑ The savings is actually even a bit more, in the sense that there is less actual cash outlay from you if you look at the payment values posted above ($629.75) vs (672.24). If you wanted to be technical about this, you would reduce the amortization from 15 years on the new mortgage of 1.79% (keep reducing it by trial and error) until the bi-weekly payment equals the same $672.24. This way, when you're comparing ending balances and seeing which is better, you're are confident that the actual cash outlay over the 5 years from both scenarios is the same.
Most lenders allow you to "roll in/add in" penalties/fees of up to $3K, so an additional exercise you can do is add in $2.7K to the mortgage balance ($218.7K), run the calculator at 1.79% and whatever amortization you need to choose to get the SAME payment of $672.24. You will have adjusted for penalty, keeping the bi-weekly cash outlays the same, and can just directly compare ending balances (apples-to-apples).
In any event, it appears there are savings for you, but just wanted to clarify the calculation.
Aug 31st, 2020 7:44 pm
In the example above, your payments will be lower by approximately $42 bi-weekly, so you can take that money (around $5k total) and put it toward the mortgage, if your mortgage allows increased payments. Even without doing that, you'll benefit from your balance at the end of the term being lower by around $3,200 due to more money going toward the principle vs. interest, even with the lower bi-weekly payment.
Aug 31st, 2020 7:47 pm
This is exactly why I asked this question; for insight like this. Thank you!Nukey wrote: ↑ In the example above, your payments will be lower by approximately $42 bi-weekly, so you can take that money (around $5k total) and put it toward the mortgage, if your mortgage allows increased payments. Even without doing that, you'll benefit from your balance at the end of the term being lower by around $3,200 due to more money going toward the principle vs. interest, even with the lower bi-weekly payment.
Sep 1st, 2020 2:06 am
Sep 1st, 2020 6:06 am
It's 5 months into a 5 year fixed term at 2.72%.fogetmylogin wrote: ↑ Did I miss something? How much time is left on your current 5 year mortgage? If your penalty is only $2700 it doesn't sound like it's the full five years (or minus a few months). This changes your calculations in two ways. Remaining interest of course but also on the other end. If you have 2 years left for example you are very likely to get a very similar rate as now in 2 years whereas 5 years from now it is less known.
Sep 2nd, 2020 1:33 am
Sep 2nd, 2020 5:58 am
3 months interest is $1440. I got the IRD penalty in writing and it's $2701, but keep in mind that lender is doing the IRD based on 2.45%. The 1.79% is a different lender.