Blended mortgage rates
If you are going to break your existing mortgage early instead of paying the penalty the lender will sometimes offer a blended rate. The lender will take your existing rate and blend it with the current rate for the term remaining.
For example, if you arranged a 5 year fixed rate mortgage of 3.50% 2 years ago your current term will have 3 years remaining. The lender will take whatever the current 3 year fixed rate is at the time you break your mortgage and blend it with your existing rate of 3.50%. If the 3 year fixed rate is currently lower than your existing rate, you will obtain a rate between your existing rate and the new rate. The new rate will be good for the term remaining which in this case is 3 years.
Whether or not you blend the rate depends on a number of factors:
By completing an online application I can process the numbers to see if it makes sense to blend your usmortgage or pay the penalty and obtain the lowest rate.
For example, if you arranged a 5 year fixed rate mortgage of 3.50% 2 years ago your current term will have 3 years remaining. The lender will take whatever the current 3 year fixed rate is at the time you break your mortgage and blend it with your existing rate of 3.50%. If the 3 year fixed rate is currently lower than your existing rate, you will obtain a rate between your existing rate and the new rate. The new rate will be good for the term remaining which in this case is 3 years.
Whether or not you blend the rate depends on a number of factors:
- Your existing rate.
- Number of years remaining on your existing term.
- Penalty to break the mortgage.
- Current mortgage rates.
- Current mortgage balance.
- New mortgage amount.
- Personal circumstances, ie how long you are planning on keeping the property.
- If you anticipate rates to increase in the future.
By completing an online application I can process the numbers to see if it makes sense to blend your usmortgage or pay the penalty and obtain the lowest rate.
