COVID-19 both a health crisis and an economic crisis. Many Canadians are worried about losing their jobs and they are looking for ways that they can save money.
Perhaps that’s the reason why so many Canadians in Mississauga are now looking into refinancing their mortgages. Refinancing can be a great strategy for homeowners who want to save on interest and reduce their monthly debt payments. It may even be a smart strategy for you.
What does it mean to refinance your mortgage?
Put simply, refinancing your mortgage means breaking your current mortgage and getting a new one -usually at a lower interest rate. And, since the Bank of Canada has lowered interest rates three times since COVID-19 started, there is a very good chance that you would be able to refinance your mortgage for a lower rate than you currently have now.
The main drawback to refinancing your mortgage is that because you will have to break your current mortgage, there will very likely be a financial penalty for doing so. Generally speaking, however the closer you are to your mortgage renewal date, the lower that penalty will be. So if you need to renew your mortgage within the next year anyway, you might save quite a lot of money by refinancing but if you’ve recently renewed your mortgage, then refinancing might not be worth it for you.
That’s why before you decide to refinance, you should consult with a professional mortgage broker who can run the calculations for you as to how much you would actually save (or not) with a mortgage refinance.
Refinancing your mortgage to pay off debt
One major reason why many Canadians choose to refinance is so that they can consolidate their high interest debt. Most lenders when you refinance will allow you to borrow up to 80% of your home’s equity and add that to the mortgage.
Depending on the rate of interest that you are paying on your other debts and how much money you save on your mortgage interest payments, your overall debt payments could be much less while still allowing you to get out of debt faster.
Again though – you will need a mortgage broker to run these calculations for you in order to see if this strategy makes sense for you.
Contact Akal Mortgages today
If you are thinking about refinancing your mortgage in Mississauga, we can help. Contact Akal Mortgages today to speak with a member of our team.
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