Refinance your mortgage: Is it time?

Is a refinance in your future for 2025? If you are a home owner and you feel like your mortgage isn’t quite the right fit anymore, you’re not on your own. Many people feel this way, but what can they do about it? One move you can consider is to refinance your mortgage. This can have a huge impact on how your mortgage works for you and your overall satisfaction with homeownership. Before you take the leap, however, here are some key points to consider.

How has the market shifted?

One of the first things home owners consider when they think about their mortgage is their interest rate. While you shouldn’t exclusively focus on rates when you are mortgage shopping, there’s no denying it is a huge part of your product. If you are wondering whether to refinance your mortgage, this can be a good place to start. We are currently in a period of rate drops, with the Bank of Canada recently lowering the overnight rate to three per cent. If you have a variable-rate mortgage, you likely know this is good news for you. Each time the overnight rate lowers, so does your mortgage rate. On the other hand, those with fixed-rate products might feel like they are missing out on these benefits. If you hold a fixed-rate product and you think a refinance should be in your future, don’t take action just yet! Be sure to have this discussion with your mortgage broker to ensure a refinance would suit you.

Have your needs changed?

Over time, everyone’s housing needs will evolve. It’s completely normal if you are starting to realize that the mortgage contract you signed four years ago, for example, no longer suits you. Much like our jobs change and our personal needs evolve, our mortgage requirements can absolutely shift as you experience homeownership. For example, a first-time home buyer may want a mortgage with a longer amortization period so they can ease into the market and make smaller payments over time. However, after a few years, that home owner may realize they have the ability to make larger payments, and they want to speed up their mortgage repayment process. That’s when a refinance might come into play! Home owners can often shorten their amortization period so they make larger payments to clear their balance faster. If your needs have changed in a way that impacts your feelings about your mortgage, a refinance is worth considering.

Look ahead to the future

Your decision to refinance should take your future needs into account as well as your present-day circumstances! A refinance is a process that takes time and effort to complete. It also means you need to break your current mortgage term, which will likely result in financial penalties. With all that in mind, it’s important to understand that a refinance will have a major impact on your homeownership experience. If you plan to sell your house and relocate in a couple of years, for example, a refinance is likely not worth the effort. Odds are you will pay more in fees than you will be able to save, limiting the benefits. On the other hand, if you want to stay in your home long-term and make improvements to it through renovations, a refinance could be a smart option. This allows you to access some of your home’s equity to support the costs of renovation projects, which are often expensive. Refinancing a mortgage is a solution designed for people who plan to stay in their home for the long run.

The decision to refinance your mortgage can be a wise one, depending on your situation. However, it is also one you should make with the help of a mortgage professional. Working with a broker is the best way to know whether a refinance truly makes sense for you. You should be certain this is the right move, and feel confident in your future plans. For anyone considering a refinance, reaching out to your local broker is the best place to start. We are here to make your homeownership experience as successful as possible. 

If you have any questions about your mortgage, give us a call at Centum Home Lenders! You can reach us at 506-854-6847, or get in touch with us here.