Great news for Canadian home buyers: you now have access to a 2.44 per cent mortgage rate, the lowest five-year fixed mortgage.
2016 is shaping up to be one of the most competitive spring mortgage markets in memory.
Click here to see the lowest rates available in your area.
Term: 5-year fixed
Lender: Centum Financial Services Ltd. Partnership Kelowna, BC
High Ratio-Eligible: Yes
Rate Hold: 30 Days. NOTE: This rate is not applicable for pre-approvals. Applicants must be ready to close their home purchase within 30 days to qualify.
Prepayment Privileges: Yes – up to 5 per cent monthly and annually
What Would I Save With A Rate This Low?
Let’s assume you are buying a home for $500,000 and plan to make a 5% ($25,000) down payment, leaving you with a $475,000 mortgage.
Because you are a high-ratio borrower, you will also legally require mortgage default insurance, offered either through the Canada Mortgage and Housing Corporation or a private insurer like Genworth or Canada Guaranty. According to the CMHC, your premiums on this mortgage would total $17,100.00, which is rolled into your mortgage loan.
This would leave you with a total mortgage of $492,100
At a rate of 2.44%, your monthly payment would be $2113.
Now, let’s compare this to the next best rate offered by one of Canada’s federally-regulated big banks for this term – 2.79%, offered by TD and BMO. With this rate, you will pay $2,197 monthly.
What you’ll save monthly:
What you’ll save annually:
What you’ll save over a 25-year amortization:
Want to see how YOUR payment would change? Check out our mortgage calculators here.
Prepayment Features Are Important
One caveat to note: while this historically low rate means cheaper borrowing costs throughout your mortgage term, this particular product offers less-than-competitive prepayment privileges at only 5% monthly and annually. While National Bank's 2.84% offering means you’ll pay more monthly, it offers up to 15% lump sums to be made on an annual basis, along with the ability to double your monthly mortgage payments.
Lump sum payments are an option that allows you to put an extra payment toward your mortgage. The amount goes directly to the principal owed, which shortens your overall mortgage amortization and results in less interest paid over time.