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Discussion Starter · #1 ·
Hi everyone, please help me figure out what to do with my current mortgage situation...

I am currently in a 5 year fixed mortgage at 2.74% interest rate (Scotiabank)
Principal balance is 332,543
Renewal date is on Aug 28, 2024

1. I've seen some crazy low mortgage interest rates as of today and read somewhere that a Blend and Extend Mortgage could help lower down my interest rate without paying any penalty.

2. Also, I've been wondering if breaking my current mortgage to go into a new one would be worth it as well. Saw some crazy low interest rates e.g. HSBC (Special offer rate of 0.99% APR***on a 5-year variable closed term high ratio mortgage)

3. Lastly, what should I do first? Who should I start to talk to to begin with? (Mortage broker, Scotiabank, HSBC?)


If someone could help me how to do the right calculations to crunch some numbers, that would be highly appreciated as well. Cheers everyone!
 

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Hi everyone, please help me figure out what to do with my current mortgage situation...

I am currently in a 5 year fixed mortgage at 2.74% interest rate (Scotiabank)
Principal balance is 332,543
Renewal date is on Aug 28, 2024

1. I've seen some crazy low mortgage interest rates as of today and read somewhere that a Blend and Extend Mortgage could help lower down my interest rate without paying any penalty.

2. Also, I've been wondering if breaking my current mortgage to go into a new one would be worth it as well. Saw some crazy low interest rates e.g. HSBC (Special offer rate of 0.99% APR***on a 5-year variable closed term high ratio mortgage)

3. Lastly, what should I do first? Who should I start to talk to to begin with? (Mortage broker, Scotiabank, HSBC?)


If someone could help me how to do the right calculations to crunch some numbers, that would be highly appreciated as well. Cheers everyone!
I would start by asking what the penalty is to discharge and what the penalty is to early-renew.
 

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Have a look at the Martin's Mortgage Manoeuver:


In a nutshell, the author proposes to blend-and-extend your mortgage, and once its done your IRD base rate is reset and you can break the mortgage with a very low penalty. YMMV, do your own research, etc etc.
 

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Discussion Starter · #5 ·
Have a look at the Martin's Mortgage Manoeuver:


In a nutshell, the author proposes to blend-and-extend your mortgage, and once its done your IRD base rate is reset and you can break the mortgage with a very low penalty. YMMV, do your own research, etc etc.
will read it. Thanks for sharing the source.
 

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Don't get fooled by the lowest advertised rate. We're no longer in an era of a "one-rate-fits-all".

Just like you mentioned, HSBC offers 0.99% for a high-ratio mortgage. That means the loan is default insured - you can't insure refinances so clearly, 0.99% does not apply to you.

You will need to talk to your bank first. Every lender has different options when it comes to breaking your mortgage contract. The blends work best when you want to increase your loan amount.
Remember, just because you avoid a penalty, doesn't mean that one isn't triggered. It all comes down to how your lender blends that penalty into your new mortgage amount, rate and term.
 

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Discussion Starter · #7 · (Edited)
UPDATE: So i followed @balexis suggestion about doing Martin's Maneuver and here is where I am at. (I think this is gonna work)

I talked to my current lender (Scotiabank) about doing a Blend and Extend Mortgage and it was done. They brought down my rate from 2.74 to 2.49.
Before doing it, I asked how much I will be paying to break the mortgage and of course, it was a staggering 17k CAD. And now after doing the Blend and Extend, I called Scotia and asked how much now I will be paying to break it, and they quoted me an estimate of around $2,000+.

I am now currently shopping around with the best rates I could get, I am looking at getting a variable rate (Have seen the lowest 1.24% with HSBC for switching mortgage)

My follow up question is how do i do the switch properly and what should I look out for? Thanks!
 

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UPDATE: So i followed @Money172375 suggestion about doing Martin's Maneuver and here is where I am at. (I think this is gonna work)

I talked to my current lender (Scotiabank) about doing a Blend and Extend Mortgage and it was done. They brought down my rate from 2.74 to 2.49.
Before doing it, I asked how much I will be paying to break the mortgage and of course, it was a staggering 17k CAD. And now after doing the Blend and Extend, I called Scotia and asked how much now I will be paying to break it, and they quoted me an estimate of around $2,000+.

I am now currently shopping around with the best rates I could get, I am looking at getting a variable rate (Have seen the lowest 1.24% with HSBC for switching mortgage)

My follow up question is how do i do the switch properly and what should I look out for? Thanks!
I believe @balexis gets credit for the reco.
 

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UPDATE: So i followed @balexis suggestion about doing Martin's Maneuver and here is where I am at. (I think this is gonna work)

I talked to my current lender (Scotiabank) about doing a Blend and Extend Mortgage and it was done. They brought down my rate from 2.74 to 2.49.
Before doing it, I asked how much I will be paying to break the mortgage and of course, it was a staggering 17k CAD. And now after doing the Blend and Extend, I called Scotia and asked how much now I will be paying to break it, and they quoted me an estimate of around $2,000+.

I am now currently shopping around with the best rates I could get, I am looking at getting a variable rate (Have seen the lowest 1.24% with HSBC for switching mortgage)

My follow up question is how do i do the switch properly and what should I look out for? Thanks!
First you need to see if you can Switch the loan without incurring solicitor fees. If Scotia registered a collateral charge, Switches are not possible - at least not free. The most you would incur is a solicitor fee to discharge and register a new lien. Personally, I recommend against switches - the new lender never discharges the old lien so the day you sell, you need to pay for all the extra discharges depending how many times you switched lenders.

Other than that, you're free to bring your mortgage just about anywhere since you're paying a penalty. Just make sure your new mortgage is not restricted by anything - don't get fooled by low rates alone. A variable rate today hovers at prime (currently 2.45%) minus 1.00%. Anything lower than that is very possible.....just ensure you read the fine print.
 
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