How Transferring your Mortgage Can Save you Money

Signing Mortgage Paperwork

Are you watching mortgage rates go down while locked into a higher rate mortgage?

Many people are reluctant to switch their mortgage to another financial institution because of the penalties they will need to pay to get out of their mortgage early. However, in many cases, a lower mortgage rate can save you more money in interest than the amount of penalties you will have to pay.

So if you’re locked in to a higher rate mortgage, transferring to Cambrian for a lower mortgage rate could save you a significant amount of money, and here’s how:

Carl and Judy have an existing mortgage of $245,000 with an interest rate of 3.35%

Amortized over 25 years, their monthly payment is $1,230

They also have credit card debt of $15,000 with an interest rate of 18.99%

Paying $443 every month, they will pay it off in 4 years.

With both their mortgage and credit card debt, their total monthly payments are $1,673.

At these current interest rates, when they have paid off their mortgage and credit card debt in full, they will have paid a total of $130,161 in interest.

If Carl and Judy paid a prepayment penalty of $10,000 to transfer their mortgage to Cambrian and added their credit card debt to their mortgage:

  • They would save $17,968 in interest costs.
  • Their total monthly payment would decrease by $396 per month.

New Mortgage

$270,000 at 2.99% amortized over 25 years

(includes $245,000 existing mortgage + $15,000 credit card debt + $10,000 interest penalty)

Monthly payment would be $1,276, which is $396 lower per month

At this current interest rate, when they will have paid off their mortgage and credit card debt in full, they will have paid a total of $112,193 in interest, for a savings of $17,968.

By adding the $10,000 prepayment penalty to their mortgage balance and securing a lower interest rate for both their mortgage and credit card debt, their total net savings would be $7,248.

Switch your mortgage to Cambrian and save money! ().

Try out our Mortgage Comparison tool to compare your existing mortgage and a Cambrian mortgage to see how much you could save on interest.

 

This scenario and our interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide financial or investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.