Calgary Mortgage Brokers Help Payoff Home Faster

(Newswire.net — December 29, 2014) Calgary, AB — It’s simple. If you pay a lower interest rate, you save money.  Mortgage brokers in Calgary are able to get a better mortgage rate than the banks.  Money saved can be used to pay down the mortgage faster.

For example, the current mortgage rate for a new 5-year fixed term mortgage rate through a mortgage broker is 2.89% as posted on the Pioneer West website.  

The current posted rate on the CIBC website is 4.99%.  On the TD Canada website, it is 4.79%.  RBC’s website quotes the rate is 4.94%.  

In some cases, banks will provide a “discounted” rate, especially if they know you are shopping around.  A Calgary mortgage broker will generally know where to go to get the best rate and they will provide the best mortgage rate that you qualify for without having to haggle.  

The average house price in Calgary as of November, 2014 is $486,308 as posted on the CREB website.  

Let’s say the average person will get a mortgage on 80% of the selling price. The monthly payment on $389,000 will be $1,819 at 2.89%, amortized over 25 years from a mortgage broker in Calgary. The same mortgage from a bank at 4.79% will cost $2,216 per month.  That is a saving of $397 per month.  

If that savings is applied to the mortgage payments, the mortgage will be paid off 6 years earlier.  That works out to a saving of $76,840 compared to paying out the mortgage over 25 years.  

The Financial Post reports that “38% of people with a mortgage took some action to pay down their debt faster than they had to”. People are choosing to pay off their mortgage faster than the standard 25 year amortization.  Common ways of paying down a mortgage faster is by making semi-monthly, bi-weekly, weekly, accelerated bi-weekly and accelerated weekly payments.  

If you add these methods to the $397 saved by the mortgage broker on semi-monthly payments your house will be paid off 10 years earlier.  On bi-weekly payments it will still take about 10 years, but there will be a saving of $5,553.  Accelerated bi-weekly payments will shave 12 years.  Weekly payments will pay off the house 15 years earlier and accelerated weekly payment will save an additional $6,683.  

It gets even better if you consider that according to CAAMP “About 11% of homeowners took an equity take-out” and “The most popular reason was debt consolidation”.  Assuming there is enough equity in the house, the $397 per month savings can be applied to get a mortgage renewal of $475,000.  That means up to $86,000 of credit card debt can be paid off at 2.89% interest instead of paying 19% to the credit card companies.  

That’s a saving of $13,854 per year.  Realistically, there aren’t many people who would have that kind of credit card debt, but in any case there is a lot of money to be saved through debt consolidation using home equity.  

If money saved from the debt consolidation were applied toward paying off the mortgage, the house would be paid off in record time.

Getting a mortgage from a Calgary mortgage broker can be a real smart move.