Sunday Dock Read – Canada Day! & Is Refinancing the New Renewal?
Happy Canada Day! Eh
Canada Day is here! For many, it’s considered the best long weekend of the year. It holds a special significance for me, for a unique reason I’ll explain shortly. There are countless reasons to celebrate Canada Day—we have much to be proud of. I often think about our achievements in sports, such as Mike Weir winning the Masters, Sidney Crosby’s Golden Goal, Donovan Bailey’s feats, and of course, Terry Fox’s inspiring run across Canada. Plus, Canada Day marks the opening of bass season!
Canada holds a unique place in my heart, a sentiment that became clear as I began backpacking and travelling. It seemed natural to sew my country’s flag onto my pack, a symbol that resonated regardless of where I ventured. Locals consistently treated me with warmth and kindness, often remarking on Canadians’ reputation for compassion, friendliness, and respectfulness. This experience, spanning Costa Rica to Hong Kong to the Philippines and countless other countries, offered me a fresh perspective and underscored my newfound responsibilities.
It’s common knowledge that our friends from the south also sport Canadian flags on their backpacks. I always enjoyed asking them where they were from. Often, they’d say, “I’m from Toronto,” but their mispronunciation would give them away. I’d play along, asking, “That’s wonderful! Which borough?” They’d usually mumble something like, “Oh, on the west side.” Ah, Americans…
Are Renewals the new Refinancing?
We’ve all experienced it: sifting through the mail, separating flyers from important letters until you come across one from your lender. Whether it is from a Chartered Bank or another financial institution, you know it’s that time again—several years after you first secured your mortgage.
Inside is your mortgage renewal offer. Lenders are mandated to send out a renewal letter at least 21 days before your mortgage’s maturity date or when your balance is due, though they typically arrive about two months earlier.
I don’t need to remind you how much mortgage rates have changed since you signed three or five years ago—you’re likely well aware. According to Mortgage Professionals Canada, nearly 25% of all Canadian borrowers will be renewing their mortgages in 2024, and half will do so within the next two years. This renewal trend is expected to significantly increase median monthly mortgage payments by as much as 54% for some borrowers by 2027.
Even with the Bank of Canada’s rate decrease this month, the hardship and distress of this economy will continue until the next Bank of Canada’s rate decrease on July 24th. Hardship and distress are just synonyms for adversity.
And Adversity, though difficult, ultimately provides an opportunity for those who face it head-on.
Prepare for your Renewal as if it was a Refinance
- In your hand, you have what your current Lender is willing to offer you.
- Only you and your family know the true state of your Financial Situation.
- Let’s arm you with the strategies that can help you make the best out of this opportunity.
Give me six hours to chop down a tree and I will spend the first four sharpening the axe.
-Abraham Lincoln
The following are Strategies that will help prepare you. Metaphorically; let’s sharpen that axe.
1. Refinance to Consolidate Debt
Excluding Mortgage Payments, the top monthly payments that typically charge interest include:
- Credit Card Payments
- Personal Loan Payment
- Line of Credit Payments
- Installment Loan Payments
Refinancing your mortgage to consolidate debt can be one of the most strategic financial decisions you make. Not only does this approach simplify your monetary management, but it can also lead to substantial long-term savings. Let us explore the advantages that make this option compelling.
One significant benefit of refinancing your mortgage for debt consolidation is the potential to secure a lower interest rate. Mortgage rates typically are lower than those of credit cards, personal loans, and other consumer debts. By using a mortgage refinance to pay off these higher-interest debts, you can markedly reduce the total interest paid over time.
HuronMortgages.ca Approved Statement!
Importantly, consolidating your debts into a single mortgage payment streamlines your financial obligations. This consolidation means you only need to monitor one payment date and amount each month. Simplifying your payments in this manner can lower the risk of missed or past due payments, which could otherwise harm your credit score. Additionally, it provides the convenience and peace of mind of having a clearer view of your overall financial situation.
Consider This: If you implement three or more strategies from the list above even if you renew at a higher interest rate, your monthly expenses are likely to decrease.
Complete an Application and find out exactly what your savings would be https://apply.invismi.ca/?wid=41002591
2. Refinance and Extend your Mortgage Term
More and More Lenders are offering 30-year and 35-year amortization periods for certain mortgage products. However, availability can vary over time and may depend on factors such as the borrower’s financial situation, the type of property, and specific lender policies.
Contact your Mortgage Agent at Huronmortgages.ca here to find out which ones. https://huronmortgages.ca/contact/
3. Is it time to Downsize your home?
Downsizing your home can have financial benefits:
- Lower Mortgage and Expenses: Moving to a smaller, less expensive home often results in reduced mortgage payments or no mortgage at all if you buy outright. It also cuts down on property taxes, insurance, and maintenance costs.
- Decreased Utility Bills: Smaller homes have lower utility costs for heating, cooling, electricity, and water, which can save you money, especially if your current home is larger or less energy-efficient.
- Equity Release: Selling a larger home can unlock equity tied up in your property. You can use this equity to boost retirement savings, pay off debts, or invest in other financial opportunities.
- Simplified Lifestyle: A smaller home means less upkeep, fewer furnishings to buy, and potentially a simpler lifestyle with fewer ongoing expenses.
- Location Advantages: Downsizing might allow you to move to a location with lower living costs, better amenities, or closer to loved ones, enhancing your quality of life while potentially reducing overall expenses.
- Long-term Financial Security: By cutting housing-related expenses, downsizing can contribute to greater financial stability over time and provide more funds for achieving your other financial goals.
Before downsizing, consider both the financial implications and your personal preferences to ensure it aligns with your suitability, long-term plans, and lifestyle goals.
4. Rates Are Important. But Your Total Monthly Payments and Budget Matter More.
When you receive your renewal and encounter an increase, take a moment to digest that the rate being offered is higher than what you’ve been paying in your last term.
Now calculate the amount of Equity you have in your home and consider some of the strategies above.
Now calculate the amount of Equity you have in your home and consider some of the strategies above.
Remember that it’s your opportunity to make the best out of an inconvenient situation. There are a lot of positives that can come out of Renewing your mortgage.
Now you’re ready to get in touch with HuronMortgages.ca to discuss your options. Like anything in life, the more information and options you have; the higher chances you have of making a better decision increase.
Thanks For Reading!
Have Questions?
Contact us today to schedule your personalized consultation and take the first step towards turning your homeownership dreams into reality or look into better investing opportunities by phone at 519.497.3667 or by email at Matt@HuronMortgages.ca.
Mathew Monks, Mortgage Agent Level 2
Licence #M18002043
Mortgage Intelligence FSRA
Licence #10428
