When Canadian interest rates were flirting with record-lows in 2016, more people than ever turned to refinancing to get the most out of their home.
In Edmonton, this was no different.
Edmonton mortgage rates – along with the rest of Canada – have increased in the past year. Although they aren’t nearly as high as they have been in the past, they are still something that needs to be monitored by homeowners and potential buyers.
You may have heard from family and friends that they recently refinanced their mortgage and got a great deal. While that may be true, it doesn’t necessarily mean that it’s a good path for you.
Without further ado, here are some reasons why you should (and shouldn’t) refinance your current mortgage in Edmonton:
The current mortgage rate is lower than the one you have on your current mortgage. One of the main reasons that people opt to refinance their mortgage is to take advantage of the interest rate when it falls lower than the rate they are currently signed with on their existing mortgage.
How does this help? You get a lower interest rate and can contribute smaller monthly payments.
Should Not Refinance
You want access to the equity in your home. This may seem tempting (especially if interest rates are reasonable), but you should not refinance a mortgage for the sole reason of withdrawing equity from your home.
You may be tempted to complete home renovations, pay off a credit card, or contribute to a post-secondary education, but ultimately you will be extending the amount of time that you will be paying your mortgage.
Shrink the term of your current mortgage. Refinancing to get a shorter term length on your mortgage is a good reason to act. In doing so, you have the ability to pay smaller monthly payments while reducing the number of years that it will take to pay off the mortgage.
Even the smallest change in rates can make an enormous difference over a typical 30-year loan. Of course, this only works if interest rates fall to a number that makes sense to do this!
Should Not Refinance
You are planning a move soon. If you know that you aren’t in your forever home, refinancing your mortgage doesn’t make a whole lot of sense. You should consider that if you did refinance, how long would it take for you to pay off the costs of closing your new mortgage? If you aren’t going to be in your home long enough to break-even, refinancing may not be a good idea.
Are you currently in the Edmonton area and have an existing mortgage? Refinancing could be for you. Before deciding whether you want to refinance and if it will benefit, speaking with a mortgage Edmonton broker like Vaughn can give you the insight, advice, and guidance you need to make an educated decision.
Reach out to him today and find out how he can help.