Refinancing Your Mortgage – Worth it?!

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Is your current mortgage plan your best financing solution for your lifestyle? Canadian mortgage rates continue to be at ultra-low levels recently and the potential to refinance might be a cost friendly move at these unprecedented low rates. If you have ever thought of refinancing your mortgage or accessing your home equity, this could be the time to take a closer look.


Is your current mortgage rate much higher than today’s market rates?

Perhaps your original mortgage rate was approved at a time where your personal finance picture was not as strong as it is today and the actual rate is 1% to 2% higher than what you might be approved with today’s available rates. By reworking your mortgage and applying new rate solutions, the monthly payment could be substantially lowered or perhaps the payment level could be maintained to pay off your mortgage sooner as you’ll be subject to less of an interest paid portion.


To consolidate existing debt

For those who have outstanding loans (student loans, car loans or credit cards) at high interest rates, the opportunity to access your current home equity could prove to be one that can save you great amounts of interest against those outstanding loans. As well, with recent home values increasing the way they have the last couple of years, there is more equity available for many homeowners and at the new lower rates, the time to restructure your loans could be one that brings your peace-of-mind to enjoy your lifestyle.


Variable rate mortgage versus the security of a fixed mortgage rate

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That age-old question that comes up all the time for us mortgage brokers; should I get a fixed mortgage or a variable mortgage? Well if you’re currently enrolled in a variable mortgage and enjoying low rates but concerned about rates increasing in the near future, this one might for you. With major Canadian Banks keeping interest rates low during the pandemic, could there be increases in the near future? To offset any predictable rate increases, perhaps comparing what a competitive rate for a fixed mortgage rate solution would be compared your current variable rate mortgage. A mortgage advisor would be able to outline the potential of savings (or security) you could experience over time. As well, a mortgage broker would be able to present you options form various lenders to bring forth the most competitive fixed mortgage rate.


Applying for a refinancing solution

In order to access additional funds, your current mortgage plan would essentially be replaced with a new reworked plan in order for you to enjoy the applicable benefits. Lenders will look at your personal situation which involves your income status, credit loans, current home value assessment and other items similar to applying for your very first mortgage. This qualification is all to prove that you can manage the new mortgage payment going forward without any major difficulties.

If you are thinking of mortgage refinancing, it would be beneficial to keep major expenses low leading up to the new application. Meaning, if you have your eye on that new electric vehicle, recreational toys or fancy home electronic or furniture purchases to be financed on the “pay later” plans, then you may want to delay those. Talking with your mortgage broker early to structure a plan and the right time to apply would be a good exercise in getting prepared. It’s great to have equity to access in your home but accessing without a robust plan would not be advised. Like any personal finance matter, I recommend discipline and outlining clearly the goals for mortgage refinancing and the amount to be accessed.

These are just some of the reasons that you may want to consider refinancing your current mortgage and there maybe other needs you may want to explore. There could be other fees, property assessment or penalties from your current contract to be aware of. I’m happy to discuss and share strategies to support your personal mortgage finance goals. Feel free to connect with me at anytime to discuss further.


All the best,

Sukh Sangha

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