In February we started the process to remortgage our home to consolidate our debt. Today is our closing date and now we are consumer DEBT FREE! As I had recently decided to stay home with our 2 small children, we needed to lower our monthly debtload. Last year we bought a new vehicle and have been living somewhat beyond our limited means, so our line of credit was growing. Since the bank mortgage interest rates dropped dramatically, we decided to take advantage. We managed to get a mortgage rate at 4.72%; a whole percentage below our prior rate. When you remortgage before your maturity date, you pay a penalty. Our penalty is $1300, but we save about $5000 in 5 years, and potentially more if we can take some of the money we save monthly and drop it on our mortgage- yeah, well worth the penalty! We added $30000 to our mortgage and are paying roughly the same monthly payment with only extending our mortgage by 1 year, and our other debt is gone. That is easy on the brain and wallet!
Use this neat calculator from First Credit Mortgages to see how much you could be saving if you choose to do the same!
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Filed under: Featured, Tips & Advice
Just be careful when refinancing your home. Many companies will want you to go back to 30 years again which costs you a lot of money. For example, if your mortgage payment was 1,000/month and had paid on it for 5 years you have paid 60,000 out of pocket and only paid down about 10,0000 to give them the benefit of the doubt. If they stretch you back out to 30 you get to pay that 50,000 all over again. Just something to think about.
Yes, you HAVE to make sure that you are aware of the specifics when you sign! Read the small print, but most banks ask you your preference for amortization period at the get go! Thank you, Teresa.