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Let's say a customer wants to transfer $400,000 mortgage to CIBC. He has 2 options. % i# r7 m; V: f! L' u
1. 3-year closed mortage with 3.3% and 3% cash back.
3 h+ v' Y% P7 }$ G2. 5-year closed mortgage with posted rate 5.39% and 5% cash back
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" k4 x1 L2 f+ A& w3 R0 n3 EOption 1. After 3% cash back, your mortgage amount will become $400,000*0.97=$388,000 with 3.3% interest/ t1 x" m& M( L& j j, A
If you want to payoff your mortgage in 25 years. Monthly PMT $1896.44. The remaining balance is $356,393 after 3 years.
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; ^3 ]9 n+ U$ [Option 2. After 5% cash back, your mortgage amount will become
5 n+ F3 ]% L- V' X) b" o1 G! H$400,000*0.95=$380,000 with 5.39% interest.
6 ~, j4 p$ L4 p- g& i, ^5 A& y, PIf you want to payoff your mortagge in 25years. Monthly PMT 2295.21 The remaining balance will be $356,351.50 after 3 years
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Basically, for the above options, after 3 years, the mortgage remaining balance is similiar.
3 k' L* I. f* r; ?; M9 YIf you choose the 2% cash back with 3.3%, every month you save about $398.77 monthly payment for 3 years. Total roughly saving ($398.77*12*3=$14,355) |
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