This is often a busy time of year for those looking to refinance their mortgage. Refinancing is a popular option for homeowners right now, especially since housing supply is still so low. For many people, refinancing is the best choice for paying less on a home at the moment. However, sometimes it’s still hard to know when refinancing is the right decision for you.
There are a lot of factors at play when a person considers refinancing, such as interest rates, debt, and mortgage terms. Here, we’ll dive into all of these aspects to give you a better idea of where you stand. Maybe refinancing is the right choice for you, and maybe not, but it’s best to know for sure!
Current rates are much lower
One of the main reasons people choose to refinance is to access lower interest rates. Right now, refinancing could be the right move because of how low rates are across the country. The overnight rate sits at 0.25%, its lowest in more than ten years. A lot of homeowners who locked into their mortgages years ago are now missing out on today’s rates, so refinancing can be a great way to save more money.
It may be a good time to refinance if your current mortgage rates are way above today’s rates. This is especially true if you’re currently in a fixed rate mortgage. Having a fixed rate mortgage means you’re still attached to the rates of a few years ago. Refinancing for a lower rate will most likely save homeowners a good amount of money, and odds are, it will be worth the process. The drop Canadians have seen in rates is significant enough to give a refinance some serious thought.
You’re looking to consolidate debt
Debt consolidation is another huge reason to refinance. If you’re struggling with your finances and have a home with an active mortgage, you may be able to refinance to consolidate that debt. Take advantage of your mortgage to help you with your debt! You can roll all your debt into one monthly payment, which will make it easier to keep track of your finances and expenses. Since rates are so low, you can probably get lower interest rates than you may currently have on some of your existing debts.
It’s hard to know when refinancing is the best option for you when you’re having financial troubles. When you have lots of debt and some of it sits at an alarmingly high rate, though, it might be a good time to consider a refinance. You can read more about refinancing for debt consolidation here.
Changing specific terms
Sometimes, the terms you agree to when you get your mortgage don’t seem as great down the road. If that’s the case, it could be a great idea to refinance. This way, you can alter some of your terms to fit your changing needs. If you currently have a variable rate mortgage, for example, switching to a fixed rate now could mean enjoying these historic low rates for the remainder of your mortgage. If you’re looking to pay off your mortgage early, and know you’re financially capable of it, that could be another reason to refinance. Switching to a shorter term, or a mortgage with more payment flexibility, are both potential options. This could give you the freedom to pay off your mortgage faster.
You need access to home equity
Refinancing can also be the right thing to do if you want access to your home’s equity. Are you planning any big expenses, such as a renovation or buying an investment property? You can refinance to access some of that equity. This will help you finance those expenses, which will undoubtedly be larger than most other costs.
Consult a broker
No matter what you think is the best move for you, make sure you speak to me before you decide to refinance your mortgage. The market has most likely changed since you got your first mortgage, especially in terms of interest rates. I can help you understand how your situation fits in with today’s market, and what your options are moving forward. I can also help you decide if refinancing is the best move for you and what kind of rates you could secure.
As a broker, I work for you and have your best interests in mind. If you’re thinking about refinancing your mortgage, get in touch with me here!