Take Advantage of the New Low Rates on Mortgage Refinancing
With the current trends in the housing market, homeowners could save tens of thousands on their mortgages by refinancing their mortgage.
When COVID-19 hit North America, many Canadians experienced immediate effects via loss of job, leading to reduced income. To minimize the impact of the virus, the Bank of Canada lowered its key rate three times in March. It’s been steadily held at this rate since.
Borrowers with great credit scores can now find 5-year fixed mortgages with rates as low as 2.14 percent, which is the cheapest it’s been since 2016. Specialists predict rates will stay in this ballpark for up to two years, based on Bank of Canada trends.
If there’s ever been a time for homeowners to refinance, it’s now.
Why Should I Consider Home Refinancing?
If you’re looking to save money in the long run or reduce your monthly payments, home refinancing can help.
Many Canadians are finding it harder to manage their monthly bills from the impact of COVID-19. When you refinance, you create a new repayment plan for your mortgage, replacing the previous. A penalty for breaking your previous agreement is involved, but a refinance at this time will very likely more than make up for that amount.
A home refinance won’t just get you a better rate – it’ll also save your credit score if you’re struggling to meet monthly payments.
How Do I Know If I Should Refinance?
If your current mortgage rate is higher than 3% — or 0.75% higher than the rates you can get now — you should definitely consider refinancing your mortgage for a better rate.
Let’s imagine you have a $500,000 mortgage with a 4 per cent fixed rate and an amortization of 20 years. The total interest you’d pay over a five-year term would be $90,634. The interest for that same mortgage at 2.69 per cent would be $60,374. By refinancing, you’d save $329 per month, $6,392 per year and $31,960 over the full length of your five-year term. The extra savings can help you free up more financial wiggle room during this time of uncertainty.
For anyone unfortunately unemployed during this time, you may have a harder time getting refinancing at a bank. Thankfully, you can still qualify for one from a private lender such as Leap Financial. With private lenders, the rate you qualify for is based on the equity in your home instead of your income or credit score.
If you are interested in refinancing your home, and have questions about the process, feel free to contact our specialists. We would be more than happy to clarify any questions you may have.