• adjustable rate mortgageAlthough an adjustable rate mortgage (variable rate) is riskier than a fixed rate because it fluctuates with the prime lending rate, sometimes the risk is worth the potential savings. Following is an example to illustrate this. These numbers are based on a $250,000 mortgage amortized over 25 years with a 5 year term, interest compounded semi-annually.

     

    5 YEAR ADJUSTABLE RATE VS 5 YEAR FIXED RATE PAYMENT COMPARISON

    Term

    		 Monthly Payments (Principal and Interest only) Total Payments (5 years) Principal Paid Down Interest Paid

    5 Year ARM 2.35%

    		 $1,101.33 $66,079.80 $39,047.97 $27,031.83

    5 Year Fixed 3.34%

    		 $1,227.16 $73,629.60 $34,936.06

    $38,693.54
    Difference between payments $125.83 LESS! $7,549.80 LESS! $4,111.91 MORE!

    $11,661.71 LESS!

    This table shows that over a 5 year term, you could potentially save almost $12,000 under these conditions.

    Robert Floris is a licensed mortgage agent and financial planner at Mortgage Architects located in Hamilton, Ontario and serving Toronto and all of Ontario.

    He can be contacted at 905-574-9200 Ext. 215 OR by email at mortgages@robertfloris.com.

    Apply online at https://application.malink.ca:8112/App/MARC/FLORISR/en-ca/1896 with absolutely no pressure and no obligation.

    Click here to see what others are saying about Robert!

     

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