FIXED Rate Mortgage or VARIABLE rate mortgage??

What is the right choice for your client?

It can be confusing especially in an environment where fixed rates are still at a record all time low and Prime Rates are on the rise. The media creates a frenzy with every movement in Prime, we know it's going to increase, and we know the Government has to be cautious as our economy recovers. Even with the .75% increase in prime this year the variable rate mortgage is still a great choice and option for your client to front end load their savings with low interest rates.

 

Does Your Client….

- Want to save money on Interest and pay off their mortgage faster?

- Want to pay less each month and enjoy Lifestyle Choices?

- Have the room in their budget to handle fluctuations?

 

Lets compare a $250,000 Mortgage on a 25 year amortization:

- On a 5 Year Fixed Rate Mortgage at 3.69 for 5 years

- On a 5 year Variable Rate Mortgage at Prime -.70 and we'll assume a .50% increase in Prime per year

 

5 Year Fixed

Rate

Monthly Payment

Interest Paid

Balance

 

Year one

3.69

1,273.38

9,051.02

243,770.46

Year two

3.69

1,273.38

8,819.01

237,308.91

Year three

3.69

1,273.38

8,578.39

230,606.74

Year four

3.69

1,273.38

8,328.79

223,654.97

Year five

3.69

1,273.38

8,069.91

216,444.32

 

Total Paid

76,402.80

42,847.12

 

5 Year

Prime -70

Rate (with .50% prime increase/yr)

Monthly Payment

Interest Paid

Balance

Year one

2.30

1,095.17

5,644.32

242,502.28

Year two

2.80

1,155.34

6,659.33

235,297.53

Year three

3.30

1,214.96

7,607.85

228,325.86

Year four

3.80

1,273.87

8,481.88

221,531.30

Year five

4.30

1,331.87

9,312.31

214,861.17

 

Total Paid

72,854.52

37,705.69

 

 

With the Variable Mortgage you will:

~Pay $3,548.28 LESS in Monthly Payments over 5 years

~Pay $5,141.43 LESS in Interest       

~Balance will be $1,583.15 LESS with the variable mortgage

Total savings across all three factors $10,272.86

Compliments of Street Capital

Carol Ireland

Carol Ireland

Sales Representative
CENTURY 21 Millennium Inc., Brokerage*
Contact Me

Blog Archives

Tags