Ladder Down
Step your mortgage rate down year by year. No penalty, no new money out of pocket, same debt.
01Your numbersgreen = yours
02Rate by year
| Yr | Lock at | Your rate | Δ |
|---|---|---|---|
| 0 | — | ||
| 1 | -0.075% | ||
| 2 | -0.075% | ||
| 3 | -0.075% | ||
| 4 | -0.075% |
Each year locks for the time left in your term. Shorter locks can price higher - tap a green cell to use the real rate for that year.
03How it works with your numbers
- 01Draw $75,000 off the HELOC.
- 02Drop it on the mortgage as a lump sum. No penalty - it's inside your 15% privilege.
- 03Call the lender. Lock that $75,000 as its own component at 4.00%, matched to your existing maturity date.
- 04Same call each year. 4 calls over 4 years and you pay 0.30% less on the same debt.
04Your mortgage at maturity
| Still at your rate | $200,000 | 4.50% |
| Locked lower | $300,000 | 4.00% |
05The receipt
| Rate you pay today | 4.50% |
| Rate after 4 years | 4.20% |
| Change over the term | -0.30% |
| Interest saved over 4 years | $3,700 |
| New money out of pocket | $0 |
| Penalty to do this | $0 |
| Calls to your lender | 4 |
06Questions
What is a readvanceable mortgage?
A mortgage and a home equity line of credit combined under one lending limit. As you pay the mortgage down, credit becomes available on the line. The ladder only works on this kind of mortgage.
Is there really no penalty?
The move uses your annual prepayment privilege - the percentage of your mortgage most lenders let you prepay each year penalty-free. Stay inside it and there is no penalty. The tool caps every move at your privilege.
Where does the money come from?
Your own HELOC. You draw available room, put it on the mortgage as a lump-sum prepayment, then lock that amount in at the lower rate. You owe the same total before and after - no new money leaves your pocket.
Does my payment change?
The total you pay each month stays the same. What changes is how much of your debt sits at the lower rate, so more of each payment goes to principal instead of interest.
Will my lender let me do this?
Not every mortgage allows separate components or readvancing, and shorter lock terms can price differently than the tool assumes. That is the ten-minute check - book a call and bring your mortgage details.