The Importance of Rate

Home owners and prospective purchaser shouldn’t neglect the importance of rate over the term of your mortgage. The stronger your credit the better your negotiating power. If you are a bank customer and the only business they do with you is your mortgage they most likely will try to charge you a rate close to their posted rate.

The tables below illustrate the costs to you if you don’t ensure yourself the best rate for your given circumstances. One more reason to use the services of a mortgage broker such as Verico Accede Mortgage Group.

In our examples we use a $200,000.00 Mortgage amortized over 25 years.

Example 1

1 Yr Term
		Monthly	End of Term	Interest
	Rate %	Payment	Balance	Paid
Best	5.6	$1,232.45	$196,186.33	$10,976.33
Posted	7.1	$1,413.20	$196,939.06	$13,897.46
Dif	1.5	$180.75	$752.73	$2,921.13

Summary: Over the period of the one year term accepting a rate 1.5% higher than the best rate would cost you:

• $180.75 more each month
• $2,921.13 more in interest over the term and
• You would have paid $753.73 less off the balance of your mortgage.

Example 2

3 YrTerm
		Monthly	End of Term	Interest
	Rate %	Payment	Balance	Paid
Best	5.7	$1,244.17	$188,058.02	$32,848.14
Posted	7.5	$1,463.11	$190,674.16	$43,346.12
Dif	1.8	$218.94	$2,616.14	$10,497.98

Summary: Over the period of the one year term accepting a rate 1.8% higher than the best rate would cost you:

• $218.94 more each month
• $10,497.98 more in interest over the term and
• You would have paid $2,616.14 less off the balance of your mortgage.

Example 3

5 Yr Term
		Monthly	End of Term	Interest
	Rate %	Payment	Balance	Paid
Best	5.79	$1,254.75	$179,135.53	$54,420.53
Posted	7.44	$1,455.58	$183,077.54	$70,412.34
Dif	1.65	$200.83	$3,942.01	$15,991.81

Summary: Over the period of the one year term accepting a rate 1.65% higher than the best rate would cost you:

• $200.83 more each month
• $15,991.81 more in interest over the term and
• You would have paid $3,942.01 less off the balance of your mortgage.

We could go on and add longer terms with different rates but I think by now you get the picture. You personal circumstances may not allow you to enjoy the best rate in the marketplace, however getting the best you can is important - It saves you money.

At Verico Accede we pride ourselves in ensuring each client obtains a Better Mortgage. Give us a call today