We all know and read about when mortgage rates increase.
Mortgage rates play a critical role in determining how much a borrower will have to pay on their mortgage every month. As a Canadian borrower, it is important to be aware of the current rate trends and how they can affect your mortgage. Whether you are locked into a term or variable depends on the timing and how it affects your payment.
Interest rates are determined by the Bank of Canada. When there is a rise in the overnight rate (the rate at which the 6 major banks borrow/lends money), the prime rate adjusts accordingly. This increase in the prime rate will affect your mortgage borrowing rate if you have a variable-rate mortgage, as well as any borrower who is due for a mortgage renewal.
To offset this increase, refinancing your balance as soon as possible makes sense if you are saving money, resulting in a positive net gain.
A positive net gain creates a situation where it is worth it to perform the refinance. This is because refinancing your mortgage can help you break your current mortgage term and pay off your outstanding debt, leading to an increase in cash flow and/or interest savings.
Refinancing can help you to pay off external debts if you are worried about your overall debt load. It can also be considered to help save you money on higher interest-rate debt by allowing you to lock in at a better rate.
How We Can Help
Our team of Mortgage Agents and Brokers can provide a detailed review of your current debt scenario and compare the savings you can make by refinancing. By working with a professional, you can put yourself on the best path to a better mortgage and make informed decisions that will help you save money.
Always review your mortgage terms with your Mortgage Agent/Broker to put yourself on the best path to a better mortgage, or check out our rate here.
