If your mortgage is coming due in the next 1-2 years: should you refinance to lock in a new rate now?  The real question is; does the upfront cost warrant security in a rising interest rate economy?  The upfront cost of refinancing is really the penalty.  The discharge fee and legal fees would still be incurred if you refinance on maturity.  These costs can be added in to the new mortgage so you aren’t out of pocket. 

If you are paying the same or a higher rate than lenders are currently offering then it is time to book that appointment with your mortgage broker.  Even if your rate is slightly lower than current rates it may still make sense to refinance now versus a few months down the road.  If you already have lower rate then penalty would probably be only 3 months interest.  (Check out our past blog, “No Two Penalties are Created Equal”.)  You may think that it best to stick with the lower rate until the end of your term but given that rates have been rising and qualifications are changing it may still benefit you to refinance now. 

Refinancing has another major appeal. It gives the homeowner opportunity to change the terms of their mortgage. Perhaps you wish to take out some equity that could fund an urgent repair or renovation your home needs or consolidate some high interest debts. Perhaps your current mortgage does not allow for large prepayments and you are expecting a surge of funds to come in within the next little while that you wish to apply to your principal. Or maybe you would like to shorten up the amortization to pay it off faster or get access to a lender that allows double up payments so you are not obligated to pay extra each month, but can if you wish to.

There is no better time than now to look at your current mortgage, especially following last week’s announcement of further changes to the way client’s must qualify for a mortgage, effective January 1, 2018.  There will be a significant impact to the amount you could qualify for, come 2018.  For more details on the changes, contact us to make an appointment and click here to read a great article from The Globe & Mail.