Should you consider a mortgage refinance?

Is it time to consider a mortgage refinance? Many Canadian home owners choose to refinance at some point. The tricky part is determining when this might be the right move for you. There are several factors involved in this decision to ensure the process goes smoothly. Here are the most important things to know before you dive into the refinancing process!

Why do people choose to refinance?

Home owners may want to refinance their mortgage for a variety of reasons. However, the one thing they have in common is a desire to change or improve their current mortgage terms. In most cases, this is the driving force behind refinancing. People who are already happy with their mortgage don’t need to make adjustments for no reason. On the other hand, home owners who are not satisfied with their product may benefit from refinancing. For example, a home owner may wish to shorten their amortization schedule. Another person might want to expand their prepayment options. We will discuss these items in more detail below.

Potential reasons to consider a mortgage refinance

There are several reasons to consider a mortgage refinance. For example, you might want to shorten or lengthen your amortization period. Shortening means you will pay off your mortgage faster by making larger payments. Lengthening means you will pay it off more slowly, but with the benefit of smaller payments. In times of low interest rates, some home owners take advantage of the chance to pay off their mortgage more quickly by making bigger payments that won’t be charged a high rate. When rates are high, as they have been recently, longer amortization periods are more common. The benefit here is the ability to make monthly payments more manageable, which can be tricky during times of high interest rates. 

Another common reason to refinance is to gain prepayment privileges. This allows you to speed up your mortgage payments to pay it off faster, and ultimately pay less interest. Some home owners also want to switch between fixed-rate and variable-rate products. Depending on the housing market and economy, certain products may serve home owners better than others. 

Ultimately, each home owner will have their own motivations for refinancing. You can talk to your mortgage broker about your individual options!

What are the risks?

So, should all home owners consider a mortgage refinance? As with all other aspects of homeownership, refinancing isn’t the right move for everyone. It can pose certain risks for people as well. For instance, it’s very important to ensure a refinance will be worth the cost. Breaking your mortgage term to refinance will likely result in a penalty. These fees can be hefty, so your refinance should save you more than you need to spend. Otherwise, you are spending for no reason. You shouldn’t refinance unless you have a good reason to do so. The process of refinancing takes time, so you should be committed to the process. If you are unsure whether a refinance is right for you, it’s essential that you get in touch with a mortgage broker.

Working with a mortgage broker

A mortgage broker is a very important part of refinancing. First, we have the market experience and industry knowledge to guide you through the process. We can work together to determine how a refinance might benefit you, what changes you are looking to make, and what the actual process looks like. Your broker can also help you better understand your situation, and whether a refinance is right for you. We can provide the most accurate calculation of the costs and benefits of refinancing. A broker is a professional you want on your side as you navigate the prospect of a refinance.

Refinancing your mortgage could be very beneficial to you as a home owner. However, before you start the process, you must make sure it’s the best option for you in the long run. When considering a refinance, don’t forget to reach out to a mortgage broker for guidance.

If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.