Breaking my mortgage early...

My mortgage is up for renewal in 2 years. However, I'm currently being wooed by my bank to make the switch over to them. I'm seriously thinking about it.

My penalty for breaking my mortgage? 1300.00. Plus the bank will cover 500.00 towards legal fees, and some other fees amounting to close to another 700.00. Then, we had the critical illness policy added in, plus the death one. ( I currently had death but no critical illness).

My interest rate is 4.10 and I owe 80,000.00 roughly. My new mortgage would be 106,000.00, and I would have 2 major debts paid off ( "saving" 2400/year in interest and another 3600 in repayment/ year). Plus if I go with my bank, I won't be paying bank fees any more ( 10.95 added to the mix or a savings of another 131.40/year).

My payments will increase to around 360/ biweekly, up from 260. I have two options a 4 year mortgage at 3.39 or a 7 year at 3.89 both rates are good until mid June.

My income will be dropping mid june from 1600/biweekly to 1250/biweekly, however I will no longer be paying rent-150/biweekly or the 400 km round trip communte each week, another savings of 150/biweekly gas, plus the addition oil changes( every 6-7 weeks 45.00 which works out to be 8.5/year 342.50 a year) to one every 4 months or so 180/year, plus saving on the wear and tear on my vehicle. I could also take in a boarder for the school year, which could add another 300/month to my income.

Any thoughts, ideas, etc?


Suzy said…
sounds like you have it figured out! :-) I know in the US mortgage interest is deductible on taxes so I'd rather have mortgage interest than credit card interest, etc

BlogReader said…
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I don't have a house and therefore no associated costs, however, it still might be worth your while to check around to other banks and see what they can offer you with respect to mortgage rates and bonuses for switching. If your bank is doing a serious woo, then it's in their best interests to match what other banks can offer - or at least offer something comparable.
The Witch said…
I think you have this pretty well figured out right down to every dollar. Very impressing! The student could really help you out also just make sure you get the right match for you since they will be sharing part of your home.
All banks seem to be offering these deals and I would still shop around. I know we can also renew but no penalty fees are involved. Bank of Montreal is offering a 2.99% rate at the moment.
Canadian Saver said…
Everything I've read from the big financial gurus is not to add debt to the house, as you're transferring unsecured debt (CCs) to your house. The danger is if you lost your income you'd have a higher chance of losing the house.

And then there is always the chance of running the CCs right back up. Not that you'll lose your job or run up the CCs, but I think that's why it's often advised against (but the banks seem to encourage this!!)

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