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Mortgage Savings Formula:
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Mortgage rate comparison in Canada helps homeowners determine potential savings when switching to a new mortgage rate. By comparing your current monthly payment with a proposed new payment, you can calculate your monthly savings.
The calculator uses a simple formula:
Where:
Explanation: This calculation shows how much you would save each month by switching to a new mortgage rate.
Details: Comparing mortgage rates is crucial for Canadian homeowners as it can lead to significant savings over the life of a mortgage, help reduce financial stress, and potentially allow for earlier mortgage payoff.
Tips: Enter your current monthly payment and the proposed new monthly payment, both in Canadian dollars. Ensure both values are positive numbers with your current payment typically being higher than the new payment to see savings.
Q1: How often should I compare mortgage rates in Canada?
A: It's recommended to compare rates every 1-2 years, or whenever your mortgage term is nearing renewal.
Q2: Are there penalties for switching mortgages early?
A: Yes, most Canadian mortgages have prepayment penalties. Always calculate if the savings outweigh the penalty costs.
Q3: What factors affect mortgage rates in Canada?
A: Bank of Canada policy, economic conditions, your credit score, loan-to-value ratio, and mortgage type all influence rates.
Q4: Should I consider fixed or variable rates?
A: This depends on your risk tolerance and market conditions. Fixed rates offer stability, while variable rates may offer initial savings.
Q5: How accurate is this calculator?
A: This provides a basic monthly savings estimate. Consult a mortgage professional for detailed analysis including all fees and penalties.