Renewal | Extending Amortizations
Mortgage Payments Getting You Down? 💸🏡
Is the thought of renewing your mortgage a little stressful? 😟 If your mortgage is coming up for renewal in the next year or so, it's likely that the rate you have now is significantly lower than what's being offered today.
Why are my payments increasing? 🤔
Many clients wonder why their mortgage payments increase despite having paid down the mortgage for 5 years. Simply put, the interest rate and the remaining amortization period determine the payments. After 5 years, you will have 20 years left on your mortgage, making the interest rate the primary factor in your new payments. If interest rates were unchanged, your payments would remain the same.
What You Might Be Facing 📉
Original Mortgage:
-
Amount: $400,000
-
Rate: 2.59% (5-Year Fixed, insured)
-
Amortization: 25 Years
-
Monthly Payment: $1,809.84
New Anticipated Mortgage:
-
Remaining Balance: $339,163.33 (after 5 years)
-
Rate: 5.54% (Average new 5-Year Fixed, insured)
-
New Amortization: 20 Years (based on having paid 5 years)
-
New Monthly Payment: $2,328.68
As shown, your payments could increase by $518.84 per month. The increase could be even higher if you opted for weekly or bi-weekly accelerated payments, further reducing the remaining amortization period.
Innovative Solutions to Manage Payments 💡
Lenders have become increasingly innovative in response to this issue. By moving your mortgage to another lender and extending the amortization back to 25 years, you can make your monthly payments more affordable. While this may not be ideal if you're aiming to pay off your mortgage quickly, it provides a more manageable solution. You can still take advantage of pre-payment privileges later on to accelerate your mortgage repayment.
In some cases, I can even secure an amortization period extended to 30 years, further reducing your monthly payments.
Example:
New Payment with 25-Year Amortization:
-
Rate: 5.54%
-
Monthly Payment: $2,078.13
While not as low as the original monthly payment, it's more affordable than the anticipated new payment.
Contact Me Today! 📞
If you're feeling the strain of renewing your mortgage, reach out to me for expert guidance. Let's explore extending your amortization to make your monthly payments more manageable while keeping you eligible for the best rates. I'm here to help you navigate your mortgage options and find the best solution for your financial situation.