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PostPosted: Fri Jun 06, 2014 12:49 pm 
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Joined: Tue Jun 03, 2014 6:15 pm
Posts: 2
Hello

I was wondering which one is better? 4 year fixed at 2.79% vs 5 year fixed at 2.99% for a mortgage btw 200-300k with fifteen years if amortization?

Your input is greatly appreciated.


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PostPosted: Mon Jun 09, 2014 10:27 am 
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Joined: Fri Feb 01, 2008 2:35 pm
Posts: 528
You can actually do better than both those rates as a 4 year for 2.77% and a 5 year for 2.89% is available. For the purposes of this calculation, i'll use the rates you quoted in your post.

At the end of 4 years, you will save $1,866.77 on the 4 year at 2.79% vs. the 5 year at 2.99% (based on a $250,000 mortgage amortized over 15 years). The break even rate is 4.13%. This means, at the end of the 4 year term, the 1 year fixed rate (to round out the 5 years) would have to be greater than 4.13% for the 5 year fixed to be the better option. While 4 years is a very long time and anything can happen, the 4 years comes across as a more attractive option.

Hope this helps!

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Paul Meredith
Mortgage Broker
CityCan Financial (est 1976)
416-409-8009
http://www.easy123mortgage.ca
paulm@citycan.com
Lic#10532

Follow me on Twitter! http://www.twitter.com/paulmeredith


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