What factors should I consider when renewing my mortgage?
When it’s time to renew your mortgage, you have the opportunity to choose the mortgage options that best suit your needs today and for the future. That’s why it’s important to assess your financial situation and goals to help you make the most fitting decision.
To start, ask yourself these questions to determine which renewal option is right for your financial situation and lifestyle today.
Refinancing when you renew Ask yourself: What are my goals over the next few years? Examples: You could be preparing to send your children to university; perhaps you need to make a major repair soon, such as replacing your furnace; or you’d like to do a major renovation, like upgrading your kitchen.
Consider: Increasing your mortgage principal. The interest rate on your mortgage is likely to be much lower than the rate on a personal loan. Renewal is an ideal time to refinance your mortgage to help you achieve your other goals.
Variable or fixed rate? Ask yourself: Am I comfortable with fluctuating interest rates? Example: You may prefer the security of paying a fixed amount each month.
Things to consider: Consider if a fixed rate mortgage or an adjustable rate mortgage better suits your comfort level. A fixed rate mortgage provides the peace of mind of having a set amount for each payment and a fixed interest rate over your term. If you choose an adjustable rate mortgage to take advantage of lower rates, you can still choose a fixed payment amount or opt to have your payment amount vary as interest rates vary.
Researching the direction rates are likely to take in the near future can help you make a more informed decision.
Source: First National