Mortgage Refinancing in Canada: The Pros and Cons
Refinancing your mortgage in Canada can be a great way to save money, pay off debt faster, or simply cash in on the equity you’ve built up in your home. However, it’s not always the right choice for everyone. Here are some of the pros and cons of mortgage refinancing in Canada that you should consider before committing to a refinance.
Pros of Mortgage Refinancing
Lower Interest Rates: One of the biggest reasons people choose to refinance their mortgage is to take advantage of lower interest rates. With mortgage rates at historic lows right now, it can be a great opportunity to reduce your monthly payments and the amount of interest you pay over the life of your loan.
Debt Consolidation: Another reason why people opt for refinancing is debt consolidation. If you have multiple loans from different lenders with higher interest rates, paying them off with a single loan at lower rate can help you save thousands of dollars over time. It can also make it easier to manage all your debts with one payment.
Access Equity: Many homeowners choose to refinance their mortgages in order to access the equity they have built up over time. This allows them to use this money for major expenses like home renovations or investments without having to sell their homes or take out additional loans at higher interest rates.
Cons of Mortgage Refinancing
Costs: While refinancing can help you save money in the long run, there are also fees associated with it which may make it less attractive option initially. There are fees such as appraisal fees, application fees, legal fees and more which must be paid upfront or rolled into the loan itself.
Time Commitment: Refinancing takes time and involves new paperwork. We will shop around for lenders who offer competitive rates and terms as well as go through credit checks etc. This is why it’s important that you contact us to begin the process.
Fixed Term Risk: Lastly, if you decide go for a fixed term loan when refinancing, keep in mind that if interest rates change significantly during that term period then you could end up stuck paying those high interest rates until your term ends even though current market conditions would offer better options.
Overall, refinancing your mortgage can be an excellent way to reduce costs and access more funds. However, it comes with risks as well so make sure that you call Callum Greig, Mortgage Broker who can guide you through this process.