Quote:
Originally Posted by photon
Ah ok, yeah I just wanted to know if there was a way to "force" them to keep the current terms (kind of how if you don't do anything with your cell phone contract it'll just keep going at the current terms).
We'll definitely try to negotiate. We're considering selling as well and they have 3.8% open which seems pretty good for an open mortgage.
Actually I was thinking of going 4 years (interest rates, next Presidential election etc), and their 2.99% 4 year is also pretty good.
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You probably only want to take the open if you're sure you're going to sell, and that it'll be soon. Example: If you take the 3.8%, in one year you'll pay 3.8% in total interest and no penalty. If you take the 3% closed and sell in a year, you'll pay 3% in interest, and a 0.75% penalty. (3 months interest ~= annual rate/12*3months)
So you're a bit better off taking the straight closed variable with a 3 month payout penalty than taking the open mortgage. If you're sure you're going to sell in less than a year, then the open makes sense.
The same logic doesn't apply to a fixed, because if rates go down the penalty is based on interest rate differential and could be very high.