Like many other countries, Canada kept interest rates low and avoided increases during the pandemic. However, now that we’re moving towards a post-pandemic economy, those frozen rates are likely to start going up, and thanks to various problems around the world, there’s a good chance they will be going up more than usual.
So far this year, the Bank of Canada has adjusted the prime rate to 3.20%, which is a 0.5% increase that started after April 20, 2022. You should consider refinancing your home to lock in a lower rate.
If You’re Close to the End of Your Mortgage Term
If you’re already close to your mortgage term, and since we know interest rates will be going up, it might be a good idea to refinance now to be sure you’ll get the lower current rate for the next few years.
The Bank of Canada Prime Rate as of April 20, 2022.
If You’ve Got a Variable Rate
If you’ve got a variable-rate mortgage, you may want to refinance and switch to a fixed-rate mortgage. Variable rates only make sense when the interest rate is trending downwards, and that’s not what we’re seeing right now. Securing a fixed-rate mortgage can also help with finance predictability for easier budgeting; plus, you won’t see an addition on your mortgage when the rate increases.
If You Want to Shorten Your Repayment Period
Not everyone was negatively affected by the pandemic. Many people found that it made it easier to save since they weren’t as social and weren’t traveling. Some also found that working from home saved them money.
If you’re one of those who had that experience, you might want to put your extra cash into your mortgage to pay it down sooner. Refinancing over a shorter term will also decrease the total interest you have to pay, which might mean you don’t have such a significant change in your monthly payments.
If You Want to Consolidate Debt
On the other hand, if you were one of the people who felt the pinch during the pandemic, you might be carrying more debt. It might be a good idea to refinance your home to consolidate debt and lock it in at the more favorable interest rate we have right now.
If You Want to Access Equity
If you want to access some of the equity you have in your home and keep a reasonably low-interest rate on your payments, now is the time to do this. The longer you wait to refinance and access that equity, the more you’re likely to pay for doing this.
If Your Credit Profile Has Changed
If your credit profile improved over the pandemic, you might now qualify for a lower mortgage rate. This means it’s a good idea to refinance before rates go up and increase, swallow up any advantage that might give you.
If you’re still wondering if refinancing your home now makes sense, Mortgage Design Group Inc. can help. Our team is knowledgeable and friendly, and we’re always happy to help new and existing clients to make the best choices for their financial future. We recommend you book a 15 Minute Call with us today to see how we can help you secure the best interest rate possible!
