Mortgage rates are dipping and homeowners in Ontario are seriously thinking about the relationship between a new mortgage and savings. For those who are working with adjustable rate mortgages, the allure for the certainty offered by the fixed rate option has never been stronger.
If your fixed rate dates back to 2010 or earlier, I am almost certain the current mortgage rates in Ontario are much lower than your rate. This alone should motivate you to refinance. Definitely, there are other benefits too as we will see.
Reasons to Refinance and how much you can potentially save
Do you have a five-year mortgage with a few years, say three, to go? Refinancing the mortgage can save you thousands of dollars and reduce your monthly payments significantly.
You may be wishing to invest in a property or renovate your home. By refinancing, you can get home equity and get some finances for such projects.
Consolidate Your Debt
There is so much that you can consolidate into the loan-personal loans, credit card balance, line of credit and so on. While you debt does not change, consolidating helps you reduce your interest rate and monthly payments. You could save as much as $500 monthly.
Steps To Be Successful In Refinancing
Look At Both Sides of the Coin
Most people who are hastily applying for refinancing cite the savings. However, is it that straightforward? Experts advise otherwise. You need to be cautious and consider more than just savings. Have you even considered the new interest payable for the new loan?
Normally, interest is already paid off within the first few years of the mortgage. The rest of the period is spent paying the principle. With the new loan, you could be paying a lot for the interest.
Even if the interest were awesome, you also need to look at your refinancing reasons in detail:
- How has your relationship with the current lender been?
- Are you planning to invest some of the money?
- Would you be interested in consolidating some of your unsecured debt?
Prepare Relevant Documents
Lenders in Canada are very strict nowadays, not like a few years ago when the housing boom first emerged. Oftentimes, they have asked me for brokerage and bank statements. For refinancing, you will need to produce copies of your credit reports. Since these reports are not completely devoid of errors, make sure you have enough time to countercheck and ask for rectifications if needed.
Shopping around does not mean you must dump your current lender, but sometimes this is inevitable. You may want to see what kind of offers other lenders have in store. Shopping around extensively is the only way you can be confident that the offer you get is fair.
Get All Information about Fees
The closing costs of a mortgage can be overwhelming, so you need to be careful. Ask the prospective mortgage lenders for a breakdown of the fees. Fees cover things such as appraisal, credit check, underwriting and document processing.
Mortgage refinance can prove beneficial and be an effective way to save, but you should weigh all the factors before making the decision. Regardless of your reasons for taking the bold move, the steps tips shared here will prepare you for the process. Contact the mortgage refinance experts at the Oakville Mortgage Team to get best mortgage rates and experienced advice.