Reasons an Early Renewal or Refinance MAY Be Appropriate At This Time
Fixed mortgage rates are just slightly above their all-time low from a short while ago, however, not by much, which is good. We also know that fixed rates will be heading upwards over time from where they are now, not so good. So, if you are able to arrange your new mortgage now, before rates go up further, you may be able to save in the long run vs. if you were to do this process at some point down the road when you will only be able to select from rates that are available at the time (which will very likely be higher than they are today). This applies to both early renewals and refinances.
If you have always gone with a Variable Rate Mortgage and you needed to renew your mortgage during the turmoil when the variable rates were not priced very attractively (e.g. prime + 1.00%), you may benefit from refinancing now to get a new variable rate mortgage at a respectable discount to prime.
Mortgage refinances are less about timing as they are being done to address a goal or need. However, while addressing the purpose of the refinance there are also opportunities to ensure savings can be maximized. Factors such as: term length, fixed vs. variable rate, amortization length, and various other mortgage options, should all be taken into consideration when structuring the refinance.
Reasons an Early Renewal or Refinance MAY NOT Be Appropriate At This Time
Everything in terms of your mortgage may be just fine at this time. Below is a brief list of some situations to illustrate when an early renewal or refinance may not provide any significant savings or benefit:
- The interest rate you have is lower than what is currently available
- Everything about your mortgage is OK, you are just curious to see if there are lower interest rates available. If current rates are very close to what you already have the cost to renew early or refinance may not be able to be recovered as the new rate is very close to your current rate.
- If it is unlikely that the cost to refinance (i.e. penalty) will be able to made up in the new mortgage
Re-examine your mortgage from time to time, and at least once a year. There are thousands of dollars that could be saved in many situations, but they go unnoticed. Mark our site, www.butlermortgage.ca as one of your favourites for quick reference, and you can always contact us by e-mail or phone and obtain a FREE mortgage check-up from one of our mortgage specialists at butlermortgage.ca