Refinancing

Have you been looking at current interest rates with a hint of jealousy, wishing your monthly payments were lower? Do you want to lock in the best mortgage rates in Calgary that you can find?

Whatever your reason is for looking into mortgage refinancing, remember that spending even a few moments with our mortgage specialists could open the door to solutions that could save you thousands of dollars. We’ll show you all the best options and how much money you could be saving when refinancing a mortgage in Canada.

Refinancing a Mortgage in Canada: Here’s What You Need to Know

The first thing to remember is that the bank doesn’t always have your back, especially once they’ve already sold you a mortgage. Our team of mortgage experts in Canada knows exactly how to deal with accredited lenders to ensure that you’re getting the best rates when you refinance. Don’t assume that your bank is ever going to do you any favours or that they’re even looking out for your best interest.

When you refinance your mortgage with us, we go to work for you immediately to lock in the best rates for you, allowing you to hold onto more of your money at the end of each month. The money you save can go towards your investments to grow your wealth, or it can go towards your mortgage so that you can own your home sooner.

You can refinance at the end of your mortgage term, at which point you’re free to shop around and choose the option that suits you the best.

You can also refinance during your mortgage term, for example, if there’s a very tempting interest rate that you want to lock in for the sake of lowering your payments and saving money. Another reason one might refinance during their term is if they want to access some equity from their home for an important purchase, pay down other debts, or make necessary repairs or upgrades to the home.

4 Fast Facts About Mortgage Refinancing in Calgary

Here are some things to keep in mind, including some of the pros and cons of refinancing your mortgage.

1. Timing Is Important

If you’re switching from one mortgage provider to another and you aren’t at the end of your term, you might end up facing several penalties and fees. We can help you look over the numbers to find out how advantageous it could be to refinance, even when accounting for various fees or penalties.

2. Lower Monthly Payments

Even if your priority is to have lower monthly payments, you can still pay off your mortgage in the same time frame. All you need to do is refinance at a lower interest rate. In some cases, it could be worth certain penalties or fees to do this sooner.

3. Shorter Mortgage Term

Some homeowners will choose to refinance to obtain a shorter term. They may start with a 30-year mortgage, make their payments, then end up with a larger income later in their career. As such, they may choose to refinance to a 15-year mortgage, saving a lot of money on interest payments along the way but spending more on monthly payments in the meantime.

4. Changing the Type of Mortgage

If a homeowner has an adjustable-rate mortgage and wants something more predictable, they could opt for a fixed-rate mortgage. Variable-rate mortgages tend to offer more savings in the long run, but they aren’t predictable. At different stages in life, one’s risk tolerance can vary, making it beneficial to switch from one type of mortgage to another.

With a product like Manulife One, you’re able to take advantage of both types of mortgages, and you have much more freedom to put your equity to work towards other investments without having to refinance or pay any penalties.

The Pros of Refinancing Your Mortgage

Rates: When a homeowner can get a better interest rate by refinancing their mortgage, it is usually a great idea to do so. Even a minor improvement in your interest rate can go on to save you a lot of money over time while freeing up more of your monthly income for things like investing, putting towards an extra mortgage payment, or just spending it on having fun with your friends and family.
Terms: This is an opportunity to change the terms of your mortgage, too, in case something has come along that makes more sense for you in your current financial situation. Some people will choose to change their 30-year mortgage to a 15 year, especially if significantly lower interest rates can help offset the higher monthly payments.
Cashing out equity: Some homeowners who have more equity in their home will opt to refinance their mortgage to cash out some of that equity. They’ll receive access to a lump sum of cash in return for extending their mortgage longer and giving up some equity in the property.
This money can be used for helping your kids pay for their school, for making upgrades you’ve always dreamed of to the property, to pay off higher-interest debts like credit cards, to start a business or invest in something, and more. Make sure your pension or other monthly income can cover your monthly payments!
Paying down debts: As mentioned, paying down larger debts by refinancing your mortgage can be a very useful tool if you’re disciplined enough to make sure those debts don’t creep up again. If you have a credit card at 15% or 20% interest, and you can use the equity in your home by refinancing your mortgage at 3% or 4% to pay off that credit card debt, you’ll be saving a lot of money.

The Cons of Refinancing Your Mortgage

There are some common traps you can fall into or challenges you may face if you aren’t careful when you refinance your mortgage.

Do the math: Sometimes, the rate you have will be close enough to the rate that you’ll be able to lock in, to a point where it’s not worthwhile to refinance yet, especially if there isn’t much time left on your mortgage term. This is something we can help you figure out.
Fees: If you’re thinking of refinancing your mortgage before your current term is up, make sure there’s enough of a swing in the interest rate to make it worthwhile (unless the goal is to cash out a portion of your equity, in which case there’s a specific reason for refinancing other than getting a better rate.)
You’ll have to pay fees when you refinance your mortgage early, especially if you’re moving to a different lender, and we can help you determine if that’s worthwhile or not, depending on what your specific financial goals are.
Requires discipline: This is a loan against the equity you have in your home, so if you’re not able to pay it back, your house is on the line. While it can be diligent to use home equity to pay off more expensive credit cards debts, if you don’t change the spending habits that helped you rack up those credit card debts in the first place, you’ll just end up with more maxed cards and a much longer mortgage to deal with. It can be a very useful tool, as long as you use it wisely.

Practical Advice for a Mortgage

With mortgages lasting for decades, and people trending towards buying houses a bit later in life nowadays, we’re moving in a direction where more and more people could be carrying mortgages. As such, it’s worth thinking more about how to manage a mortgage.

Should I refinance my mortgage?

While B lenders typically offer moderately higher interest rates, they are not governed in the same way as traditional banks and can therefore be more flexible — making exceptions for people with low or no credit scores when it makes sense to do so.

If you’re looking for a “bad credit mortgage”, you can book a 20 minute consultation to learn more about what we can offer you. If you decide to look elsewhere, please make sure to read all of the documentation very carefully before you sign anything, since some lenders have been known to insert very unreasonable terms into their mortgage applications.