Now Is A Particularly Good Time To Check Your Mortgage

There are 2 sides to a personal balance sheet, assets and liabilities.  Most of the time, Financial Advisors are focusing on the assets and for good reason; assets increase over time and debt decreases, eventually (for most), falling off the balance sheet.  However, debt is something that has to be dealt with and paid and the current environment is giving anyone with a mortgage, a chance to cut costs and therefore, eliminate debt faster.

We are seeing an anomaly in mortgage rates currently, that we haven’t seen in several years.  The anomaly I am referring to is that variable rate mortgages are higher than what you can get for a fixed rate mortgage.  As well, this year is the first year since 2012 & 2013 that those renewing a 5 year mortgage will pay more.  Because of that, there are a lot of people out there (you included?), where reviewing what you pay now and what a new mortgage would cost you, should be looked at at.  Doing this now could have you benefiting from this unusual time.

Currently a 5 year variable rate mortgage can be secured for around 2.9%.  A fixed rate 5 year can be done for 2.74%.  In other words, variable rates are over-priced and in turn, 5 year fixed rates are highly competitive.

If your current rate is higher than 3%, it may make sense to refinance your mortgage so you can take advantage of the cheaper, 5 year fixed rate mortgages that are available now.  As well, some terms shorter than 5 years are also more expensive than 5 year terms which is again, unusual.  I’d highly recommend first reaching out to your Financial Planner to see what they say, in the context of looking at your whole financial position and what you want for the future.  They in turn, could connect you with a mortgage broker to advise you on your options.  A good mortgage broker can help you determine if in fact it makes sense to refinance your current mortgage or line of credit.  If it does, they can get you the best mortgage package (which may include setting up a line of credit for emergency, or future needs).

NOTE:  “Mortgage lenders accessible through brokers often have more reasonable penalties for breaking fixed-rate mortgages than big banks.”  Rob Carrick, Globe & Mail, May 2019 

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