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Let's say a customer wants to transfer $400,000 mortgage to CIBC. He has 2 options. 4 N& g& P- n" d, E! U, g u
1. 3-year closed mortage with 3.3% and 3% cash back.0 K7 N/ k/ g( t+ `1 w) l7 u
2. 5-year closed mortgage with posted rate 5.39% and 5% cash back: ? F: h& y1 `/ _; \
- _ a/ K. _" ?6 v: {Option 1. After 3% cash back, your mortgage amount will become $400,000*0.97=$388,000 with 3.3% interest: w# V l' O0 j0 E
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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Option 2. After 5% cash back, your mortgage amount will become- }% q( m, O/ I3 o' A5 @+ @
$400,000*0.95=$380,000 with 5.39% interest.
/ ?0 k5 O9 {' I: ?9 NIf you want to payoff your mortagge in 25years. Monthly PMT 2295.21 The remaining balance will be $356,351.50 after 3 years
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9 m% G* I9 ?$ XBasically, for the above options, after 3 years, the mortgage remaining balance is similiar.
% M7 | n; ^7 g7 Z( c+ k$ {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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