We have a couple that are renewing their mortgage and the bank just sent them a letter containing a market rate of 3.65%. The couple has $350,000 owing on their mortgage and 20 years left on the amortization. If this couple were to do another 5-year fixed term at the 3.65% market rate their monthly payments would be $2056.94 and by the end of their term they will have spent $58,204.13 on interest, and the balance would now be at $284,787.72.
Now if this couple spoke to their mortgage consultant and he found them a more competitive rate at 3.45% over a 5-year fixed term would it be worth it to switch lenders just for the .2% rate? Let's take a look. The new monthly payment would be $2020.87, the amount of money spent on interest 54,912.67, and the balance is now at $283,659.99.