Avantages of working with a mortgage broker at renewal time

Mortgage renewals

Is your mortgage up for renewal this year?

If so, you may have already received an early renewal offer from your lender aiming to entice you with the possibility of avoiding potentially higher interest rates.

While the appeal of an early renewal may be strong, it's essential to be aware of the potential drawbacks and costs associated with this decision.

Let's explore why renewing your mortgage early may not be the best course of action.

One significant drawback of early mortgage renewal is the higher interest rate becomes effective immediately. Unlike waiting until your actual renewal date, your bank will not hold the current rates for you.

If you choose to renew early, transitioning from a lower rate to a higher one, you'll lose the advantage of the lower rate for the remaining duration of your current mortgage term. Consequently, your interest costs will increase right away, and you may find yourself facing a higher mortgage payment right from the start.

Furthermore, early mortgage renewal can be a risky move due to the unpredictable nature of interest rates. The rates are constantly fluctuating, and if you decide to renew early and the rates subsequently decrease, you could end up paying more for your mortgage over the long run. This risk of potentially missing out on even lower rates in the future is an important factor to consider when evaluating your renewal options.

So, what alternatives do you have without opting for an early mortgage renewal? A mortgage broker can offer you a rate hold, which allows you to secure a specific interest rate for a predetermined period, typically up to 120 days. That means that even if interest rates rise during this period, you'll still benefit from the low rate you locked in. With a rate hold, you have the flexibility to monitor the market and make an informed decision about when to renew your mortgage, all while enjoying the advantages of your current lower interest rate until your renewal date.

By working with a mortgage broker, you gain access to a wide range of mortgage options from various lenders. A mortgage broker can help you shop around for the best rates and guide you in understanding the different terms and conditions associated with each mortgage product. This ensures that you can make an informed decision, aligning your mortgage choice with both your short-term and long-term financial goals.

In conclusion, renewing your mortgage early can be a costly and potentially risky decision. Instead, consider collaborating with a mortgage broker who can offer you a rate hold, allowing you to secure a low rate until your renewal date.

Additionally, a mortgage broker can assist you in exploring various mortgage options, ensuring you make an informed decision, tailored to your specific needs. It's a win-win situation that enables you to keep an eye on the market while maintaining your existing lower interest rate until the end of your mortgage term.

If you would like to discuss your upcoming mortgage renewal and explore the possible options available to you, please feel free to book a convenient time on my calendar for a quick chat. You can find my calendar here: www.calendly.com/april-dunn

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Is it time to refinance your mortgage?

Benefits of refinancing

One of the questions I get frequently is, “Can I refinance or restructure my mortgage mid-term?” The answer is yes. I can help you decide whether that makes financial sense and provide strategies for you to consider.

Here are some common reasons why you might want to refinance your mortgage.

You could decrease your overall monthly debt payments by using the equity in your home to pay off those high-interest credit cards or unsecured loans.

If you are carrying high-interest credit card debt, car loans or other personal loans, you know that it can be challenging to pay off everything that you owe. You may have those post-holiday debts hanging over your head.

If you are a homeowner and there is sufficient equity in your property, consolidating all of your debt and including it in your mortgage payment might be the right solution for you.

There are many benefits to a refinance for debt consolidation including the following:

• A much lower monthly interest rate for all of your debts

• Lower monthly payments by either securing a lower mortgage rate or by extending the mortgage term

• The comfort and convenience of making only one monthly payment instead of making multiple payments on your credit cards and other loans

• Improving your credit score by reducing the amount you owe and now being able to make all of your payments on time

Finance a renovation or home improvements

If there is sufficient equity in your home, refinancing your existing mortgage could give you the funds to complete those improvements. There are some benefits to refinancing rather than taking secondary financing such as a Home Equity Line of Credit since the interest rate is fixed and you will be able to make small, consistent payments for the duration of the term—which can be up to 30 years, to pay off the debt rather carrying it on a line of credit at typically a higher interest rate.

Invest in a revenue property or purchase a second home

Real estate can be a great investment to add to your portfolio for long term investment and to create income. Utilizing the existing equity in your primary residence could be the way to get started building your portfolio.

Not sure if refinancing is right for you? The numbers don’t lie. Let’s run them together and then you’ll have an honest, unbiased recommendation and a plan of action.

Please give me a call at 1-888-561-2679 for a pressure-free consultation to run the numbers or you can book a time for a chat here on my calendar www.calendly.com/april-dunn.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Benefits of a reverse mortgage

Home ownership assistance

For many younger Canadians, the hope of owning a home is becoming increasingly difficult to achieve given today’s high cost of living and the price of real estate.

Given these challenges, parents are now more likely to step in and help their kids. A recent Abacus Data poll showed that around 40% of the parents of younger homeowners have supported their children financially, with the average gift exceeding $70,000, while 38% of parents who assisted with a down payment also now helping their children with mortgage payments.

In some cases, however, parents may not have the financial resources to provide such assistance out of their savings and if they do, there could be tax implications for cashing out any registered investments. That can leave young Canadians in a difficult position, but there might be solutions for some.

One of them is a reverse mortgage. This type of mortgage is becoming increasingly popular in Canada. Reverse mortgages allow homeowners who are 55 years and older to access their home’s equity without having to make any payments.

The amount that can be borrowed depends on the homeowner’s age and the value of the home, among other factors. Reverse mortgages have a number of benefits for those who are eligible to take them out.

Here are some of the most important ones:

1. Increased financial security: Reverse mortgages can provide a source of income which may allow you to stay in your home and maintain your independence. With the ability to access to the equity you can pay off other debts, eliminate your current mortgage, cover medical expenses and even take a vacation.

2. Tax benefits: Reverse mortgages are not considered income, so they are not subject to taxes like some investments. You may also be able to deduct the interest on the mortgage from your taxes if you are using a reverse mortgage to invest and create investment income (interest or dividends).

3. Financial assistance for family members: Reverse mortgages can also be used to assist family members with their financial needs. For example, the funds can be used to fund a child’s education or to assist with the purchase of a home.

4. Peace of mind: Reverse mortgages provide peace of mind by eliminating the worry of losing the home due to an inability to pay the mortgage. The loan does not need to be repaid until the home is sold or the homeowner passes away, so homeowners can rest assured that their home is secure.

Reverse mortgages are becoming increasingly popular in Canada as more and more homeowners look for ways to access the equity in their homes. However, it’s important to understand the terms of a reverse mortgage.

If you are considering a reverse mortgage, the best idea is to speak to an experienced mortgage broker who will review all of the pros and cons to ensure that it’s the right decision for you as there may be another solution.

If you would like to discuss whether a reverse mortgage might work for you please book a time here on my calendar for a chat www.calendly.com/april-dunn or email [email protected]

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Renovations can add to the value of your home

Time to renovate?

Renovating your home is one of the best ways to increase its value and provide yourself with financial security in the long-term.

Investing in home renovations can be a daunting prospect, with the cost of materials, labour, and other associated costs, it can seem like a lot of money to spend. But with careful planning and budgeting, it can be a great way to add value to your home and make it more desirable to potential buyers.

First and foremost, it is important to consider the type of renovations you are planning to do. While some renovations may be more appealing to potential buyers, others may not add as much value to your home.

For example, installing a new kitchen or bathroom may be more appealing to buyers, whereas painting walls may not. It’s important to research the market and find out what kind of renovations are popular in your area before investing in your project.

As well as the monetary benefits of renovating your home, there are many other advantages:

• Renovations can improve the appearance of your home, making it more desirable to buyers.

• Renovations can also increase the energy efficiency of your home, which can reduce your energy bills and help the environment.

• They can increase the safety of your home. By installing new security systems or improving existing ones, you can give yourself peace of mind that your home is safe and secure.

• They can also increase the functionality of your home. This may include adding extra rooms or expanding existing ones to make more space. This can be great for growing families or those who want to add an extra touch of luxury to their home.

• Home renovations can be a great way to add value to your property. By making improvements to your home, you can increase its worth and make it more desirable to potential buyers.

There are several possible ways that you might finance your home renovations.

• Use your savings

• Use a credit card or an unsecured line of credit

• Home equity line of credit

• A personal loan

• A loan from a family member

These are quick solutions and may work best depending on how extensive and costly your renovations might be or you could perhaps consider a lower cost of borrowing to complete those renovations by obtaining a renovation loan. Some of the benefits of this type of financing are, lower interest rates, lower monthly payments as the loan gets amortized over a longer period and access to a higher amount depending on your home equity

It is also a good option for borrowers who might feel tempted to abuse the flexibility of other home renovation options mentioned above, such as credit lines or credit cards

If you would like more information about the possible financing options available for your home improvements, please book a time here on my calendar for a chat www.calendly.com/april-dunn or email [email protected]

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

More Mortgage Matters articles

About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. For over two decades, she has been helping clients to arrange their financing to purchase a home, refinance, or renew their mortgages. Drawing from her extensive experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution, and as a Mortgage Broker, April has the necessary expertise to design a tailored mortgage plan with features and options that cater to each client's individual needs. April offers a complete range of residential and commercial mortgage financing services to clients throughout British Columbia and the rest of Canada through her affiliation with the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 1-888-561-2679.

Website: www.reddoormortgage.com

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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