Should I Refinance My Mortgage?

I think we can safely say that 2020 has been a strange year. A year of lockdowns due to a pandemic, financial support from the government, and the lowest interest rates in recent history. This has led to a rise in the number of homeowners who are considering refinancing their mortgage. According to a recent poll, approximately 20% of Canadian homeowners say they plan to refinance their mortgage in the next 12 months.

Like all financial decisions, it’s important to look at the bigger picture, which includes reviewing your goals.

First Things First -- What’s a refinance?

A refinance alters the terms and conditions of your mortgage – it’s essentially a new mortgage. Specifically, you are increasing the amount of your mortgage, whether to pay off consumer debt, finance a renovation, invest, or to get a lower rate.

Here are a few reasons to opt for a refinance:

1. Decrease your overall monthly debt payments by using the equity in your home...

Revisiting Fixed Vs. Variable Mortgages

It’s the classic rate decision many mortgage shoppers are faced with. And it’s only been made more complicated since the start of the pandemic. Towards the latter half of 2019, variable rates were flying off the shelves with rates as low as prime – 1%. A lot has changed since then.

In March, fears over the COVID-19 pandemic and the subsequent lockdown forced most banks and other mortgage lenders to cut their fixed rates from 3.95% to 2.45% within the span of just one month. At the same time, variable-rate discounts were scaled back to just prime – 0.15% to 0.25%. By the summer fixed rates were setting historic lows. That led to a dramatic shift in mortgage selection by borrowers.

Why the shift in mortgage preference?

First, the fixed rate mortgage is among the most competitive mortgage products on the market. And many believe variable rates have no more room to fall, given that the Bank of Canada’s overnight target rate...

Why it is important to get preapproved? Is preapproval the same as a ratehold?

Preapproval and ratehold are used interchangeably quite often but they can mean two very different things. It is dependent on how your mortgage broker manages them.
A true preapproval is complete when your income and down payment documents have been reviewed and your credit reviewed.

A ratehold is completed when the application is submitted to the lender. Sometimes, with rateholds, the income and down payment documents have not been reviewed.

Preapprovals with income and down payment documentation, have a much better chance of turning into an approval with the lender. It takes out the majority of the surprises in the deal. Part of our responsibilities as mortgage brokers is to review documents and look for any issues that might arise and to give advice on what is required in the documentation. There are even a few lenders that will actually underwrite the preapprovals which means they will review income and down...