A number of savvy homeowners have been taking the initiative to make sure their mortgage is as competitive as it can be in today’s low interest rate environment, and have been very happy with the results.
In fact, in many situations the savings in after tax dollars has been significant when considered over the next few years.
The cases where it is often making the most impact are those clients already in an adjustable rate mortgage. Why would that be you ask? Because the payout penalties are so minimal to get out of this type of mortgage that the upside to changing is typically too hard to ignore.
Over the last 18 months, adjustable rate mortgages have swung from extreme ends of the spectrum, at the worst of it many lenders were providing this product at prime plus 3.00 per cent, which would be a 6 per cent interest rate today. Compare that to today’s commonly available pricing of prime minus 0.65 and you have an interest rate spread of 3.65 per cent.
Now of course that is an extreme representation and not everyone will have that significant of an opportunity to save. Remember with a mortgage being your largest financial asset you can see fantastic gains with a less dramatic rate adjustment than illustrated above.
Also, in many circumstances the new lender will even pay for your legal and appraisal fees, and better yet, for some clients they are able to take advantage of this without having to requalify for the mortgage. Meaning, without much effort on your part you could be making huge gains on your bottom line.
Today’s market is creating extraordinary opportunities for those willing to sit up and take notice, by way of considerable savings for existing homeowners and incredible accessibility for first-time buyers. Not that long ago property values were increasing substantially, buyers were in bidding wars over the same homes and interest rates were much higher then they are today! (In comparison to that time, the market is like an all-you-can-eat dessert buffet now)