Why You Should Refinance Your Home Mortgage in Canada
If you’re like most people, your home is your largest asset. And if you’re like most people, you’ve probably been thinking about refinancing your mortgage.
There are a lot of factors to consider when you want to refinance your mortgage in Canada, but here are three good reasons to do it in Canada:
- Save money on interest
The average Canadian household pays a lot in interest each year on their mortgage. But if you refinance your mortgage at a lower interest rate, you could save hundreds of dollars annually or even monthly. Just one percentage point difference can save you thousands of dollars over the life of your loan.
- Shorten your amortization period
If you have a 30-year mortgage, refinancing to a shorter term can help you pay off your loan faster and save you money on interest. For example, if you refinance from a 30-year loan to a 15-year loan, you’ll probably pay less in interest overall.
Reasons to refinance your home mortgage in Canada
If you’ve been in your home for a few years and your interest rate is higher than today’s rates, you may be able to save money by refinancing your mortgage payments. Today’s rates are still low, so if you can get a lower rate, it may be worth refinancing. They are continuing to increase though so it may also be a good time to lock in a rate you can handle.
- Save on monthly payments.
If you’re paying interest and principal on your current mortgage, you can save money each month by refinancing to a shorter-term loan. For example, if you have 20 years left on your mortgage, you may be able to refinance to a 15-year loan and save money each month on your payments.
- Get cash out of your home equity line.
If you have equity in your home, you can use it to finance home improvements, pay off high-interest debt, or make other investments. Taking cash out of your home equity will increase your monthly payments, but it may be worth it if you’re using the cash for something that will increase the value of your home or help you save money in the long run.
- Consolidate Debts
With a lower interest rate If you have high-interest debt such as credit cards or personal loans, consolidating those debts into your mortgage can help you save money on interest payments each month. This will also help you pay off your debt quicker.
5 Switch from an adjustable rate to a fixed rate mortgage
A variable-rate mortgage (VRM) has an interest rate that changes over time based on market conditions. This can be helpful if rates are low when you buy your home, but if they rise in the future, your payments could become unaffordable. A fixed-rate mortgage has an interest rate that stays the same over the life of the loan, so your payments will stay the same even if market conditions change
How refinancing can save you money
Refinancing your home mortgage loan and breaking your mortgage can save you money in a number of ways. By negotiating a lower interest rate with your lender, you can reduce your monthly payments and the overall cost of your loan. You can also choose to refinance for a different loan term.
In addition to saving money, refinancing can also help you access equity in your home that you can use for other purposes, such as home renovations or investing in a rental property.
When is the best time to refinance your mortgage?
The “when” of refinancing depends on several factors, most importantly being the prime rate. If the prime rate has decreased since you got your mortgage, it may be a good idea to refinance. You can refinance at any time, but you may incur some fees for doing so. It may make more sense to wait until your mortgage is up for renewal.
How to compare mortgage refinancing options
Comparing mortgage refinancing options starts with understanding the different types of lenders and products that are available. You have many options available to you, from banks and credit unions to mortgage brokers like mortgagestogo.ca. It’s important to compare mortgage rates, terms and conditions, and fees from different lenders before you decide which one is right for you.
Here are some things to consider when you’re comparing mortgage refinancing options:
-The type of lender: There are banks, credit unions, mortgage brokers, and more. Each has its own pros and cons. Mortgage brokers like mortgagestogo.ca can help get the best rates for your real estate investment.
-Mortgage rates: Make sure you understand the interest rate and how it will change over time.
-Term: The length of the mortgage term can vary from two years to as much as 30 years. Longer terms usually mean lower payments, but they also mean you’ll pay more in interest over the life of the loan.
-Conditions: Mortgage terms and conditions can vary significantly from one lender to another. Make sure you understand what’s required of you before you sign on the dotted line.
-Fees: origination fees, application fees, credit limits, closing costs and more. These can add up, so be sure to ask about them upfront so there are no surprises later on.
What to consider before refinancing your mortgage
If you’re like most Canadians, your home is your biggest investment. So it only makes sense that you’d want to do everything you can to get the best possible return on that investment — including making sure you have the best mortgage rate.
That’s where refinancing comes in. When you refinance, you’re essentially taking out a new mortgage at a lower interest rate (hopefully) and using it to pay off your existing mortgage. The result is that you’ll save money on interest and have more money available each month to put towards other things (like paying down debt or saving for a rainy day).
Of course, refinancing isn’t right for everyone. There are a few things to consider before making the decision to refinance your mortgage, such as:
– How much equity do you have in your home?
– What are the current market conditions?
– How long do you plan on staying in your home?
– What are the costs associated with refinancing?
If you think refinancing might be right for you, reach out to a mortgage specialist today to learn more about your options.
