Should I Refinance? Blog Series Part 1 – How to Get the Lowest Mortgage Rates

With interest rates currently very low in Canada, refinancing to get the lowest mortgage rate may seem like the best idea to save yourself some money. The benefits from refinancing your mortgage can range from getting a better, lower interest rate, to shortening the length of the loan period. However, when asking yourself “should I refinance,” there are several different things that need to be considered, not just the rate of interest, to ensure that you are getting the lowest mortgage rates! 

There are many different reasons that refinancing your mortgage may be a good idea, and a lower interest rate is not necessarily the best one. Switching from a variable rate to a fixed rate mortgage or adjusting the length of your mortgage term are two important examples. These can significantly impact your mortgage interest rate.

Should you refinance? Of course, a lower interest rate can mean the lowest mortgage rate for you. Obviously, if your rate is significantly higher than those now being offered, it may save you thousands to refinance based solely on the current interest rates.

Has your credit improved significantly since you first got your mortgage? If it has, you may find that refinancing your mortgage is a good way to secure the lowest mortgage rate possible. Chances are, if your credit was not the best that it could have been when you were first approved, you are currently paying a higher rate of interest. Coupled with a lower interest rate, refinancing because of improved credit can definitely mean getting the lowest mortgage rates.

Switching from a variable rate to a fixed rate mortgage is a great way for people to get the lowest mortgage rates. If you currently have a variable rate mortgage, then your rate is not locked in, and once the interest rate goes up you will end up paying more. By switching to a fixed rate mortgage when interest rates are super low, you can ensure that you are getting the lowest mortgage rate. Taking advantage of low interest rates in this way can mean that refinancing will get you the lowest mortgage rate.

Shortening the amortization period of your mortgage can also significantly reduce your mortgage rates. For example, if the length of your loan is 30 years, you will pay a great deal more interest than if it was 25 or 20 years long. Even if you are getting the best possible interest rate, having a loan term of 30 years does not necessarily mean you are getting the lowest mortgage rates! If you have the financial ability to pay the higher monthly payment that accompanies a shorter amortization period, you can save yourself thousands in interest. In this case, the answer to the question ‘should I refinance’ might definitely be YES!

As you can see, just having the lowest interest rate does not necessarily mean that you are getting the best mortgage rate – especially when you are looking long term. You work hard for your money, and securing a mortgage that gets you the best mortgage rates can be achieved through mortgage refinancing.

For more information about what your answer to the question “should I refinance” might be, and how to get the lowest mortgage rates, please contact Paul Mangion at 416-204-0156 or visit www.themortgagecentretoronto.com.