New year… New mortgage?

Thinking about refinancing your home?

A new year allows us to start a new phase in our life. We are given a chance at fresh beginnings and a reset or renewal for our goals and desires. We are able to make new intentions and evaluate what we really want to get out of the new year. Whether you create a vision board of sorts to map out your goals for the new year, or just speak them into existence, the new year is an opportunity for our visions to be manifested. For many of us, financial freedom or better financial literacy may be a part of our goals for the new year. A part of having more financial freedom and better financial literacy is having a mortgage that benefits us in the best way possible. The new year may be the perfect time to think about refinancing your home.

Changes in interest rates?

This new year, we are expected to see some changes with the interest rates. In 2019, we saw the Bank of Canada leave interest rates almost untouched. Mortgage experts predict that the Bank of Canada will cut the interest rates by 25-bps, or 0.25 per cent. Although the Canadian economy proved to stay strong throughout 2019 given the events that shaped economies around the world, many central banks cut interest rates towards the end of the year. Because of this, experts believe there will be a rate cut within the first half of the year. 

A rate cut in 2020 could make it the perfect time for borrowers to consider a mortgage refinance. A lower interest rate means that home owners would have a lower payment each month and the overall cost of a mortgage. Lower interest rates and payments also give borrowers the opportunity to pay off their mortgage faster. This could save them thousands of dollars over the lifetime of their mortgage. 

Did you see an improvement financially in 2019?

For those that had a pretty good 2019 in terms of finances may also benefit from refinancing your home. A borrower’s financial status may have improved since they first took out their mortgage, which could lead to better rates. Borrowers that saw a significant improvement in their credit score could also benefit. A better credit score means that they could qualify for a mortgage with a better rate, which means saving more money over the life of their loan. 

Moreover, some home owners may have taken out their original loan with a down payment that was less than 20%. A down payment between five per cent and 19.99 per cent means that borrowers are subject to paying mortgage insurance. If a borrower has paid down their mortgage to at least 80 per cent of the appraised value, or there’s been an increase in the value of the property, the mortgage insurance could possibly be eliminated with a new mortgage. Eliminating the mortgage insurance once a borrower has paid down their mortgage enough means one less unnecessary expense that you’re paying.

Funding home improvements

Not only does a refinance mean possibly saving thousands of dollars, but it also frees up money for other expenses. This could mean doing those home improvements you’ve dreamed of. Those 2020 goals of a new kitchen or a luxurious new master bathroom could possibly become a reality with a new mortgage. A refinance can help you free up money, review your terms, and can help you access some of the equity you have in your home. This means you can take cash out to fund your new kitchen and bath remodel!

The new year brings new goals and intentions. We have the opportunity to start a new phase of our life and make the improvements that we’ve dreamed of. This could mean creating more financial freedom for ourselves or simply funding renovations to our home. A refinance in the new year can be the perfect first step in making that vision board come to life. We believe that breaking your existing mortgage can make sense if the rates have changed and the savings outweigh the costs. We’re happy to review your current situation and help you decide whether a refinance is right for you.

If you’re considering refinancing your home and need some more help through the process you can give us a call at 902-482-2770 or get in touch with us here!