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Let's say a customer wants to transfer $400,000 mortgage to CIBC. He has 2 options. % P9 W" ^; E, b! |2 k4 }
1. 3-year closed mortage with 3.3% and 3% cash back.' k1 D$ V! i( O0 p. ]* R
2. 5-year closed mortgage with posted rate 5.39% and 5% cash back
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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
; z& k/ _( H4 d0 A* p! _* TIf you want to payoff your mortgage in 25 years. Monthly PMT $1896.44. The remaining balance is $356,393 after 3 years.
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Option 2. After 5% cash back, your mortgage amount will become
1 i% l$ F% ]% j7 Y$400,000*0.95=$380,000 with 5.39% interest.
. v( @/ M+ U( ~* H- ~If you want to payoff your mortagge in 25years. Monthly PMT 2295.21 The remaining balance will be $356,351.50 after 3 years
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Basically, for the above options, after 3 years, the mortgage remaining balance is similiar.$ z2 b+ ], G4 _! a0 ~
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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