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Let's say a customer wants to transfer $400,000 mortgage to CIBC. He has 2 options. # B' p& D5 E. c4 U; D8 v
1. 3-year closed mortage with 3.3% and 3% cash back.0 o# h) p' ~( Q! M
2. 5-year closed mortgage with posted rate 5.39% and 5% cash back7 J# g( s9 }' `
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Option 1. After 3% cash back, your mortgage amount will become $400,000*0.97=$388,000 with 3.3% interest% T# N' T. W$ n1 Z
If you want to payoff your mortgage in 25 years. Monthly PMT $1896.44. The remaining balance is $356,393 after 3 years.8 c% ^6 R+ L9 S# _1 h, {
/ L; v( N# S3 w* hOption 2. After 5% cash back, your mortgage amount will become
% x* E! u& t) V$400,000*0.95=$380,000 with 5.39% interest.3 X, K! Y" d. z; ?, a3 d
If you want to payoff your mortagge in 25years. Monthly PMT 2295.21 The remaining balance will be $356,351.50 after 3 years8 E) n* j! y+ a# p, m$ E6 V4 Y
. w, w+ {& Z/ N& m" w( g+ ^Basically, for the above options, after 3 years, the mortgage remaining balance is similiar.
% e! V0 X" y9 v. i$ `If 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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