Rates have increased again. What do you do?
Mortgage rates have risen again. Instead of a super-sized rate hike (0.50%), this time, we saw a super-duper-sized rate hike (1.00%).
You may be wondering what to do. Here are 4 scenarios and what you should consider doing.
Are you buying in the next 3-4 months?
You should be getting a rate hold.
In the past when we had a steady or falling interest rate environment, rate holds didn’t matter much. Because chances were that the rate you’d be able to get when you have finally signed the purchase agreement would be much better or the same than the rate you were holding.
However, in our current rising interest rate environment, rate holds matter quite a bit and can sometimes save you thousands in $ interest.
In the span of a month, we have seen interest rates shoot up by 1% and if you were lucky enough to grab a rate hold, you could still have benefited from the lower rate.
You may be think rate hold are the same for all rates. That’s not quite true. Rate holds work differently for a Fixed and Variable rate. If you are holding a Fixed Rate, you are holding the actual rate for up to 120 days. If you are holding a Variable rate. You can only hold the discount that the lender is offering. For example, one lender could be offering you 0.90% discount from Prime and the part that you are actually holding is just the discount. You can’t really hold the Prime rate itself, so when Prime changes, your discount will be based on the new Prime rate.
So, what are you waiting for? Secure a rate hold with one of our mortgage pros today.
Have a fixed rate and renewing in less than 6 months?
If you have a fixed rate that’s coming up for renewal in less than 6 months, you may be considering renewing early.
Conventional wisdom might say to wait until your mortgage renewal date and then switch lenders, but these aren’t ordinary times that we’re in. It can actually make sense to break your mortgage a couple months before your renewal date. Here’s why.
Your mortgage penalty should be minimal, since penalties are based on how much time is left on your mortgage. The minimal penalty of breaking your mortgage early can make sense to pay, especially when it means securing a lower fixed rate at today’s rate, rather than the higher fixed rates of tomorrow. We don’t actually know if fixed rate will increase or decrease. This is why you should be talking to an expert.
Are you thinking of renewing early? Reach out to your mortgage pros today and get a complimentary review.
Have more than 6 months left on your mortgage?
See above. Again, it can make sense to break your mortgage early. With fixed mortgage rates still trending upward, you might decide to lock in at today’s rates, rather than the unknown rates of tomorrow.
You can also use it to reset your mortgage payment by extending your amortization period. With inflation near a 40-year high, it can really help.
Are you interested in doing that? Our mortgage pros would be happy to review your situation and advise you to be prepared for the best or worst case scenario.
Are you struggling to cover payments?
If you racked up a lot of debt during Covid, you’re not alone.
With interest rate rising, you may be finding it tougher to meet your minimum debt payments, not to mention eventually pay off your debts in full. This is when you might consider refinancing your mortgage.
Instead of having several debt payments to worry about, after you refinance your mortgage, you may only have one payment to worry about, making things a lot more manageable.
Are you consolidating your debts into your mortgage? Our mortgage pros can walk you through the steps towards a better financial you.
The Bottom Line
You are not alone, there are thousands of Canadian Mortgage App users who are thinking about a rate hold, renewing early or refinancing to consolidate debt. Reach out to our experienced mortgage pros today, who would be happy to review your situation and see what is your best move.