Is it a Good Idea to Refinance Your Mortgage?

Mortgage refinancing is a common strategy that Canadians use to lower their interest payments, consolidate their debt, save money, or access their home equity. But is it really a good idea? The answer is, that it depends on a few factors. Refinancing could save you a lot of money over time, but then again it might not. Or there may be other mortgage strategies that make more sense in your situation.

To determine whether mortgage refinancing is a good idea for you, you should sit down with your mortgage broker and let them calculate a few scenarios for you. In general though, here are a few of the factors you will need to look at in making your decision.

How much interest can I save?

If interest rates have fallen since you applied for your current mortgage, then refinancing could save you thousands of dollars over the time you own your home. And if you are using your mortgage refinance to consolidate high-interest debt, then the savings will be even more substantial.

How much of a penalty will I pay?

In order to refinance your mortgage, you will have to break your current mortgage early which usually means you will have to pay a penalty. The farther away you are from your renewal date, the higher that penalty will be. If you are close to your renewal date, refinancing may make sense. If you recently renewed your mortgage, then another strategy such as a second mortgage may be a better option for you.

How disciplined am I?

If you are using mortgage refinancing to consolidate debt, then it is important that you can be disciplined enough not to run up your credit cards or line of credit again. If you do, you could be in a worse situation than before you refinanced. Consider putting a budget together to see if refinancing can really be the start of a long-term solution for you or if you should be seeking out other financial counseling.

If you think mortgage refinancing might be for you, you should sit down with an experienced mortgage broker to help you make your decision. To schedule a FREE consultation, contact one of our professionals at Expert Financial Corporation @ 416-302-5776