Refinancing – how much will it cost?

I know that I have talked about refinance before but this week I got a new client who did their mortgage a year ago and they got a posted rate from the bank, the rate is 6.65%!
I know that sometime you wonder is it worth it to refinance and how much will it cost. These days almost all the lenders are charging interest rate differentials (IRD’s).

Here is a quick way to figure out how much the penalty will be.
Step 1: ________ (A) the current interest rate under your Mortgage
Step 2: ________ (B) the current interest rate that we can now charge for a mortgage term offered by us with the term closest to your remaining term. The interest rate will be the posted interest rate for the term
Step 3: ________ (C) A – B = C, which is the difference between your current interest rate and the interest rate in B above
Step 4: ________ (D) amount you want to prepay
Step 5: ________ (E) number of months for the remaining term of your Mortgage
Step 6: ________ (F) (C x D x E) ÷ 12 = F, F is your estimated Interest Rate Differential Amount

Don’t let the big numbers freak you out, even if you penalty is thousand of dollars you maybe able to save a lot of money by redoing your mortgage. Please have your mortgage broker run the numbers.