If you’ve been following the Bank of Canada announcements for the last year you’ll know that the overnight rate hasn’t gone up since October last year, 6 months ago. On Wednesday the Bank announced that once again, they won’t be increasing rates this month. Less than a year ago the Bank was adamant that they would be increasing rates steadily over time, but they’ve changed their tune. Now, after 18 months of increases and 6 months of stillness, the Bank states that hikes won’t be coming any time soon. In fact, speculators generally agree that we won’t see any movement until late this year or sometime in the next.
With this information in mind, if your mortgage is up for renewal you’ll likely be able to take advantage of a lower rate than you already have. If your mortgage isn’t up for renewal it may be worth it to consider refinancing. Doing this means you’ll close the mortgage you already have and open a new one (most likely with a new lender.) Doing this comes with fees and charges but the new lender is usually prepared to pay them for you or to roll them into your new mortgage. This allows you to avoid paying the cost up front.
The number one reason home owners consider refinancing is to save some money. Being able to get a lower interest rate means that their monthly payment decreases and the amount they pay on the loan overall also decreases, sometimes significantly. Refinancing also gives you the chance to switch from a fixed rate mortgage to a variable rate mortgage, or vice versa.
Someone with a mortgage may also want to refinance in order to use the equity they have built up in the property. Most of the time the equity is accessed through a home equity line of credit (HELOC) and is used to make renovations, to invest, or to consolidate debt. This last option is particularly helpful to those who are struggling with high-interest debt such as credit cards and want to be able to pay off the debt much more quickly. This is possible because HELOC rates are much lower than credit card rates.
You have the option of going to each lender and asking about their refinancing options, or you can save yourself a lot of time and go to a mortgage broker instead. The broker will have refinancing information for multiple lenders, including some offers not available to the general public. This will give you a good idea of what all your options are and the broker will be able to help you get through the process with as little difficulty possible. Currently, Your Fort McMurray Mortgage Broker can offer a fixed mortgage rate of 2.99% and a variable mortgage rate a fraction lower. Contact us today for more information.