Lock-in Your Variable Rate?

Are you in a variable rate mortgage and are thinking about locking into a fixed rate? Before you swap your 2.8% variable rate for a 5.29% fixed, how about staying variable, but setting your monthly payment the same as what it would be if you went fixed?

If you are ready to make those higher payments anyway, why not apply that extra money towards your principal instead of interest? For example...

Mortgage Owing: $500,000

Variable Rate: 2.8%

Monthly Payment: $2315.22

Years remaining: 25 

New payment if you switch to Fixed: $2,991.12

If you stayed variable and simply bumped your monthly payment to $2,991.12, then this move could potentially shorten your mortgage life by 7 1/2 years while saving you about $225,000 in interest over the life of the mortgage!

Of course this calculation has not factored future increases (or decreases) to the variable rate mortgage. 

If you would like to discuss this or other mortgage solutions, please reach out anytime!