To Buy Now or to Buy Later? It Could Save You $30,000.00!!

There are a few reasons currently that make investing in the purchase of a property now rather than waiting that could potentially pay off. I'll speak to one of the most important reasons; taking advantage of the unbelievable low interest rates still being offered. Let me give you an example:

Currently you can get a 7 year fixed mortgage rate at an ultra low rate of 3.99% On a 400K mortgage your monthly payment would be $1899.00 based on a 30 year amortization (life span of the mortgage). We all know that it's just a matter of time before rates start going up. Currently the Prime rate is forecast to go up near the end of this year. This would effect variable rate mortgages. Fixed rate mortgages, almost always, go up before Prime rate or Variable rate mortgages do.

So let's compare this scenario with a rate of 5.5% for the same 7 year term. (Note: A historical average for a 5 year term is somewhere between 5.5% to 6.5% so it's definitely a good possibility that a 7 year term could go up to this rate in the near future) Your monthly mortgage payment would be $2255.00 at a rate of 5.5%. This is $356.00 more a month. Over the 7 year term it would result in you paying $30,000.00 So by taking advantage of current rates you would save $30,000.00 in interest in this scenario.

Another thing to consider are is how much rent you would be paying before you purchase. The sooner you purchase a place the sooner you start paying your mortgage off instead of your landlords.

Have a good discussion with your realtor or your mortgage advisor about the current market housing and mortgage to determine a plan of action tailored specifically for you.

Sincerely, Tony


Tony Marchigiano | Mortgage Specialist | Royal Bank of Canada | T. 604-505-7109 | F. 778-737-0054 


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