Considering the prevailing low-interest mortgage rates in Canada, many homeowners are wondering whether refinancing their mortgage can be beneficial for them.

1. Advantages Of Refinancing Your Mortgage
Considering the prevailing low-interest mortgage rates in Canada, many homeowners are wondering
whether refinancing their mortgage can be beneficial for them. Digital and print media has taken a liking
to the low interest rates, and they have diligently dished this news to many Canadian homeowners.
Amidst all the brouhaha surrounding mortgage refinancing, if you look at it prudently, you will find that
refinancing can actually work well for a lot of people. However, saying that refinancing your mortgage
will work for every Canadian homeowner will not be apt because every homeowner has different set of
assets, liabilities, financial goals, etc. In the following paragraphs, we will take a look at the advantages
that refinancing a mortgage can have for the homeowner.
Low Interest Rates
Homeowners who took out a mortgages when the housing market was at a high can definitely save
some money by paying lower interest rates. Before the sub-prime crisis gained notoriety, it was not
uncommon for lenders to charge an interest rate of 6.5%. With interest rates hovering at 3.5%,
refinancing your mortgage can give you an interest reduction of around 3%. Although there are a lot of
other factors that you need to look into before you give refinancing a serious thought, but a saving of
more than 2% has always been thought of as a financially wise decision.
Eliminate High Interest Debt
Mortgage loan is not the only debt that takes a pie out of our paycheque. Most Canadians have to deal
with high interest rate debts such as credit card debts, student loans, auto loans, etc. Credit card debt in
particular, is notorious for wrecking havoc on consumers’ budgets. To tackle these high interest loans,
tapping into the equity of your home can be a great idea. Paying a 4% interest rate on a mortgage is way
better than paying a maxed-out credit card loan at 20%. Although skeptics may argue that a mortgage
comes with a longer term vis-à-vis credit card, but as we mentioned in the beginning of the article, there
are a lot of things to be looked into before you refinance. For people, who have say, 18 years remaining
on their mortgage, refinancing will just add a couple of years more to the term, but it will allow them to
get out of the mire of credit card debt.
These were the two most important benefits of refinancing your mortgage. As we have repeatedly said
in this article, there is no one-shoe-fits-all strategy for refinancing mortgages. Homeowners in Canada
have different financial needs and refinancing might not be the right solution for all of them. So before
taking a second mortgage, ensure that you have done a complete analysis of your finances and future
goals. There are a lot of companies that provide refinancing solutions in Canada. Having a word with the
experts at these companies might help you in gauging whether refinancing will work for you.