Canadian homeowners who are battling it out with their mortgages always know that they have one very good solution on their pockets: refinancing. When the first quarter of 2017 opened, the need to decide on whether to refinance an existing home mortgage or not has become an even bigger issue for these individuals.
As of February 4, 2017, rates on 10-year fixed mortgage were seen on a range of 3.69 to 4.69%. This is significantly lower in comparison with the rates on the first and second quarters of 2016 as offered by six major providers (CanWise Financial, First National, MCAP, and others). According to finance experts, this is the perfect time for homeowners to refinance their mortgages.
However, low mortgage rates aren’t the only reasons to apply for and avail of home mortgage refinancing loans. The following benefits should also be considered:
A Chance To Reduce Monthly Payment And Enjoy More Savings
Take for example a 10-year fixed-term loan amounting to $250,000 which is being paid at a 6% interest rate. At a rate of 4%, the monthly payments would be reduced by at least $300. This amount would already be a big help to a homeowner struggling to keep up with monthly payments.
A Chance To Get Out Of Debt Faster
Getting loan terms adjusted is one of the biggest benefits of refinancing home loans. While getting a 30-year term seems a good idea a couple of years ago, it will take just a short while for an individual to realize that this is harder to deal with than expected. Refinancing allows a borrower to adjust payment terms according to what would benefit them most in the perspective of achieving debt freedom.
A Chance To Improve Credit Scores
Let’s face the reality: a credit score of 650 and below opens individuals to disadvantageous situations such loan denial, inferior loan deals, and tendency to go to loan sharks. Being able to pay off debts faster and with regularity undoubtedly improves an individual’s credit score. This constitutes 65% of the equation used when adjusting the credit score at any period in a year.
A Chance To Shift From Variable To Fixed Rate Mortgage
Banks and loan providers always give borrowers the chance to shift mortgage types. In the past, borrowers were attracted by the low interest that comes with the variable mortgage type. However, it is only now that financial advisors and long-term homeowners are openly pointing out the true advantages of fixed-rate mortgage. Under it, a borrower is protected from the ever-changing nature of interest rates in the industry. This may be the reason why as of the first quarter of 2017, fixed mortgage are more preferred by Canadian homeowners.
A Chance To Tap Into The Home Equity
The home equity can be accessed if a borrower will choose to avail of a cash-out refinancing loan. The amount that can be cashed out can be used for other advantageous purposes such as doing home repair and improvements, payment of smaller loans, supplementing retirement income, and others.
Refinancing is one of the best financial moves that you can make nowadays. This is true not only because of low interest rates being offered by lenders but also of the advantages discussed above. If you feel that your existing mortgage situation is harder than what you have in mind earlier, this is the right time to consider refinancing.