Of Prime Interest: When’s the best time to refinance your mortgage?

Answering the right questions will help you calculate if it is worthwhile to pay a penalty (if appropriate) and refinance at a lower rate.

  • Sep. 7, 2016 2:00 p.m.

“Is it time for us to get out of our existing mortgage, pay a penalty (if necessary) and refinance at a lower rate?”

That is one of the most frequently asked questions for those in higher interest rate mortgages or those worried about what mortgage rates will do over the next few years.

The most important thing to realize is there’s no easy answer.

There are important questions to ask: What is your current interest rate? What is the remaining term on your mortgage?  What are your current payments.

That information will supply us with the tools to calculate if it is worthwhile to pay a penalty (if appropriate) and refinance at a lower rate.

What you must realize is by lowering the interest rate and leaving your payments the same as when your rate was higher, the principal amount on your mortgage will reduce much quicker, thereby saving a lot of future interest costs. Also, when it comes to a future renewal, the principal balance of your mortgage will be much less.

If you are worried about inflationary aspects due to the economy, you may want to renew early and guarantee a rate if mortgage interest rates increase in the next few years. Plus, if you are on a tight budget, lower payments may help ease a cash crunch.

Another thing to consider is consolidating high interest rate credit cards and personal loans with the existing mortgage to pay off the higher rate debt to lower your monthly cash outlay.  If you want to consolidate those into the existing mortgage, and you can afford your existing monthly payments, refinance and keep your monthly payments the same as if you were paying at the higher interest rates. That will save you interest over the term of the mortgage.

Now, if your mortgage is coming up for renewal in the next few months, consider contacting a mortgage professional as they can guarantee an interest rate for that period of time. If interest rates increase in that time, you will be safe from an increase. Also, decrease you will be guaranteed the lower rate.

The only way to know if you will save by refinancing is to talk to a mortgage professional. They have seen the ups and downs over the years and can tailor a new mortgage to suit your needs.

Just Posted

Okanagan Wildfires: An afternoon update on wildfires and evacuations

A Sunday afternoon look at the major wildfires impacting the Okanagan and Similkameen.

Mediation talks break off in casino strike

Gateway and BCGEU have no new date set for mediation

Motorcyclist taken to hospital following crash near Vernon

Extent of injuries not yet known following motorcycle in ditch on Commonage Road Sunday, July 22

All-Indigenous teams break new ground, making BC Games history

This is the first time there have been dedicated Indigenous teams at the BC Summer Games

Canada to resettle dozens of White Helmets and their families from Syria

There are fears the volunteers would become a target for government troops

Francesco Molinari wins British Open at Carnoustie

It is his first win at a major and the first by an Italian

Government sets full-time salary range for Justin Trudeau’s nanny

At its top range, the order works out to a rate of $21.79 per hour, assuming a 40-hour work week

ZONE 2: Okanagan twins bring ultimate competition to the BC Games

Brothers Connor and Holden Berrisford are each other’s main motivators

Recovery high schools could help teens before addiction takes hold: B.C. parents

Schools could provide mental health supports and let parents discuss their children’s drug use openly

Haida Gwaii village faces housing crisis, targets short-term rentals

Housing is tight and the village is pretty close to zero vacancy

B.C. VIEWS: Unions regain control of public construction

B.C.’s 40-year battle swings back to international big labour

B.C. mining company, involved in 2014 spill, ordered to pay lost wages

Mount Polley Mining Company must pay wages to 26 employees who were laid off without proper notice

Most Read