How will the Bank Of Canada announcement affect me?

The sky is NOT falling? All the economists predicted that we would have a rate increase in July. In fact most predicted that we would have one or two more increases before the end of 2018.

Remember we still have three more dates this year that the Bank Of Canada (BOC) will meet:

  • Wednesday, September 5
  • Wednesday, October 24
  • Wednesday, December 5

 

So how does the rate increase really affect you? Well let’s take a look at an average mortgage of $400,000


Prior to the rate increase these were your numbers:

$400,000 mortgage amount

5 year term, 25 year amortization

prime -1% (3.45-1%) = 2.45% variable rate

$1,782 monthly mortgage payment


After the rate increase these are your numbers:

$400,000 mortgage amount

5 year term, 25 year amortization

prime -1% (3.70-1%) = 2.70% variable rate

$1,832 monthly mortgage payment


The difference on a $400,000 is $50 each month. 

Let’s break it down!

This means your payments will increase by $12.50 for every $100,000 of mortgage you currently have.

This brings me to your strategy! What’s your strategy to avoid payment shock when the BOC increases their rates?

Don’t have one? Give us a call, we can help.

ana@lamortgageteam.com

905.870.0513

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