Mortgage Refinance When Does It Make Sense?

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Good Afternoon, I hope this email finds you well.

I wanted to chat today about a subject that - given the low interest rates - is on many peoples minds - Mortgage Refinancing. First and foremost, I want to make it clear that I am a supporter of paying off your mortgage as soon as possible. That being said however, I also support not paying high interest debt or making such high payments per month that your quality of life is significantly suffering. When clients ask about refinanicng, I look at 3 main factors:

1. Is there external debt
2. Is the family considering a large purchase in the near future
3. Is the current mortgage rate over 5%

If the answer to any of these questions is YES, then refinancing your mortgage could be a solid option.


Below is a table to demonstrate your potential savings. It can be very significant! Doing a quick review is a phone call away. 604 536-3802

An Example of a CURRENT CLIENT SCENARIO NEW & IMPROVED SITUATION
BALANCE PAYMENT BALANCE PAYMENT
Mortgage (5% interest rate) $200,000 $1067 Mortgage (3.65% interest rate)** $241,000 $1098.75
Auto Loan 8% $19,500 $395 Auto Loan Paid Off --
Department Store Credit Card 21% $4,500 $155 Department Store Credit Card Paid Off --
Unsecured Line of Credit 8.25% $7,500 $225 Line of Credit Paid Off --
Visa Card 18% $6,500 $195 Visa Card Paid Off --
Penalty to Break Mortgage – if any $3,000 Penalty to Break Mortgage Paid Off --
Total Balance & Payments $241,000 $2037 Total Balance & Payments $241,000 $1098.75

Consider This:


If you are paying a 5% interest rate on your mortgage and making monthly payments on high-interest credit cards and other debts, the total money out of your pocket each month is $2,037.


If you refinance your mortgage with a lower interest rate and pay off all high-interest debts, at month-end you will save a total of $940.00 off your payments per month. Many clients are changing from a fixed to a variable rate mortgage with a lock in option to a fixed rate given the current rate drops and saving even more.


At the same time, consider adding a Line of Credit to your mortgage. This strategy gives you future access to funds at the lowest rate possible. It simply sits there until you need it. It can be paid out at anytime without penalty and you pay no interest unless you have a balance. Rates subject to change. OAC.

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