Mortgage refinancing involves replacing your current mortgage with a new one to capitalize on better terms or lower interest rates. As 2024 brings fluctuating economic conditions in Ontario, it’s important to consider whether refinancing is a smart financial decision.
In this blog, we will review key details to be known before you make a call to your mortgage broker.
Understanding Mortgage Refinancing
In simpler terms, mortgage refinancing is the process of closing one home loan to open another through the intermediary of a mortgage broker. This process pays off your current loan and establishes a new mortgage loan, often with a new lender.
Refinancing can be a good option as it can help you lock in lower interest rates, which can lower your monthly payments, save you money over time, and allow you to gain access to home equity. Additionally, you can choose to refinance for a shorter loan term or access home equity through a cash-out refinance, which provides capital for major expenses like renovations.
However, it is important to weigh these benefits against potential associated costs before proceeding.
Why refinance in 2024?
There have been several recent economic fluctuations in Ontario, which could make refinancing your mortgage a smart move.
Recall that in 2023, Ontario faced an economic downturn dubbed as, “sticky” inflation, which captured the attention of both the public and policy-makers. Despite the consumer price index (CPI) growth easing to 3.8% in 2023 from 6.8% in 2022, inflation continued.
Inflation is still high today, increasing the living costs in Ontario and affecting household budgets.
As a homeowner, refinancing your mortgage can help you manage expenses, access reduced interest rates, and receive favourable loan terms, thus enabling you to lower monthly payments and free up cash flow to offset the impact of inflation.
If house market conditions rise, such as higher property values, you may further increase the benefits of refinancing. Additionally, if you have built equity in your home, 2024 might be the best time to leverage it and secure better terms or access funds for important financial goals.
Key Factors to Consider Before Refinancing
Before refinancing, it is essential to compare your current mortgage rates with the one being offered. A slight reduction in interest rates can lead to significant savings after an extended period of time.
However, it is important to note that refinancing isn’t without its costs. This process usually entails fees that could add up, such as closing costs, appraisal fees, and potential penalties for early repayments.
To be well-prepared, calculate whether these costs outweigh the benefits of a lower rate and how long you plan to stay in your home. If you will not be staying for long, the savings from a lower rate might not be substantial enough to validate refinancing costs.
Here’s How We Can Help You
Contacting a mortgage broker for refinancing solutions in 2024 can be a beneficial move, especially in light of the current economic conditions and persistent inflation.
Whether you are looking to lower your interest rates or monthly payments, or access home equity, the best mortgage broker firm in Ontario, Northwood Mortgage, has the expertise and resources to help you make the right decision.
We have a team of seasoned agents and brokers that understands the daunting process of refinancing and remain committed to guiding you every step of the way.
For more information, call us at (416) 969-8130 or contact us online for tailored answers on your refinancing journey!
