Are you noticing a dip in interest rates across Ontario and wondering whether it’s the right time to refinance your mortgage? If you’ve been hesitating on the sidelines, now might be the perfect time to make a move.

Mortgage refinancing opens the door to renegotiating your mortgage terms before your current term ends. Why consider this option? Well, it could be a chance to capitalize on lower interest rates, tap into your home equity to tackle high-interest debts, or even modify your mortgage terms to reduce your monthly payments. Before you make a call to your mortgage lender though, let’s review a few details like…

What Happens When You Refinance Your Mortgage?

When you refinance your mortgage, your lender uses the new home loan to pay off your current mortgage. If you need money to offset high-interest credit card debt or to pay for a high-ticket item, you may be able to increase the amount of your loan to cover that added cost. You could also get a better interest rate, change the terms of your mortgage, change lenders, or switch from a fixed-rate mortgage to a variable-rate mortgage or vice versa.

How Much Can You Borrow When You Refinance?

You can typically borrow up to 80% of the appraised value of your home when refinancing your mortgage, but you’ll have to use a portion of what you borrow to pay off any amount remaining on your current mortgage. What’s left over can be spent however you like.

For example, if your home is worth $600,000, you could borrow up to $480,000 when refinancing. But if your current mortgage balance is $375,000, you would really only have access to the $105,000 left over after paying off your home loan ($480,000 – $375,000).

What Will It Cost To Refinance Your Mortgage?

There are several costs you will have to cover when refinancing your mortgage. These include mortgage registration, legal fees, a home appraisal, and mortgage discharge fees (if you switch lenders). If your current mortgage is open, you will not have to pay a penalty, but if you have a closed mortgage, you probably will.

The penalties you will owe for paying off your mortgage early will depend on the kind of mortgage you have. If you’re thinking about refinancing and currently have a variable-rate closed mortgage, you’ll usually have to pay an amount equal to three months of interest. However, with a fixed-rate closed mortgage, the penalty can be either three months’ interest or the difference between the interest on your existing mortgage and a new one for the time left on your mortgage.

Should You Refinance Your Home In 2024?

Although interest rates are not as low as they were 2 or 3 years ago, chances are we may not see those low-interest rates again for a long time, if ever. But doing your research to find the best rate out there, looking at a different lender, or finding more favourable terms may still make sense. There are some good reasons to refinance your mortgage in 2024, based on the current market. Some of these include the following.

You want a lower mortgage rate

One of the most common reasons to refinance is to get a lower mortgage rate which will lower your monthly payments. This hasn’t been possible in recent years, as average mortgage rates have been higher than previously.

In 2024 though, that is predicted to change. The Bank of Canada has held interest rates steady over the past few months but overall opinion in the real estate world is that the BoC (Bank of Canada) will start reducing them this year.

According to Phil Soper, President and CEO, Royal LePage. “We believe that the ‘great adjustment’ to tolerable, mid-single-digit borrowing costs will have a firm grip on our collective consciousness after only modest rate cuts by the Bank of Canada.”

Although the rate cuts won’t be drastic, homeowners who bought their properties in the last couple of years — when rates were higher — would benefit from a lower rate, especially if the cost of their homes was high.

You want to pay off credit card debt

Although mortgage rates are higher than they were two years ago, they are still much lower than the typical interest rate charged on the outstanding balance of your credit card. If your combined debt from credit cards and other loans is a large amount, using the equity from your home to pay them off is a wise idea.

You want to reduce your monthly payments

Even if a lower interest rate is not going to save you much in your mortgage refinance, you can take this opportunity to adjust the terms of your mortgage to lower your monthly payments. Increasing the amortization from 25 to 30 years will benefit you immediately, although in the long run, you will be paying more interest. You may also want to switch from a fixed-rate mortgage to a variable-rate mortgage to take advantage of projected interest rate drops. If you are anticipating an inheritance or are thinking of selling in the next few years, an open mortgage would allow you to make changes without penalties.

You need money to pay for a large purchase

Accessing the equity in your home lets you use any money left over after paying off your previous mortgage for large purchases. This could be tens of thousands of dollars, depending on the value of your home and the equity you have. Typically the longer you have lived in your home, the more equity you will have.

Popular ways to use this cash are for home renovations that will increase the value of your home, buying an investment property, funding your child’s education, or starting a new business. But really, you can use it any way you choose. Take a once-in-a-lifetime vacation, pay for a wedding, or add a pool to your backyard. It’s up to you.

If The Time Is Right For You To Refinance, Call Me

Mortgage refinancing can be a little overwhelming sometimes. As a certified mortgage broker, I can help eliminate the confusion and ensure you fully understand what’s involved before deciding if refinancing your mortgage is the right move for you. Once we have run through the numbers, and made the decision to move forward, I can find the lowest interest rate and favourable mortgage options to suit your financial situation and goals.

Best of all working with a mortgage broker is free. That’s even more reason to schedule a virtual consultation with me today by clicking this link or giving me a call directly at 705-315-0516. I have more options than the banks and that may make it easier to decide exactly when the best time would be to refinance, and just how much equity you can access by doing so.