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Taking Out or Renewing a Mortgage?

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Summer is a popular season to buy a home, and therefore, it's a time when many new mortgages are taken out and existing mortgages come up for refinancing
However, given the likelihood of rising interest rates and with the federal government's new stress-test rules in effect, getting or renewing a mortgage could be more expensive than it's been for many years.
If you have an upcoming date with a mortgage lender, consider these tips to get the best rate and most suitable terms and conditions for you:
  • First, think about your financial situation and goals. For example, if your current mortgage term is a five-year fixed rate, but you're contemplating downsizing or expecting an inheritance, you may want to move to a shorter term such as a three-year mortgage, or even an open variable-rate mortgage, which would allow you to pay off the entire sum at any time.
  • Apply for preapproval at current rates. This option could provide you with valuable information, including the price of the home that you can afford based on your income and savings and the mortgage payments associated with a range of purchase prices and different mortgage terms.
  • If you're locked into a mortgage already and need to lock it in again for a new term, inquire about early renewal at a competitive rate. Keep in mind your lender knows you'll incur a penalty — and may face a new stress test — if you switch lenders, so there won't be much motivation on their part to be generous.
  • Is your debt manageable? If so, you can weigh the benefits of a variable-rate versus a fixed-rate mortgage. Since variable-rate offerings are lower than their fixed-rate counterparts, you'll save money at least for the short term. But be advised that the Bank of Canada has hiked its influential overnight rate target three times since last summer and has suggested there could be more hikes to come. If you choose a variable-rate mortgage, you will be exposed to any further rate increases.
The bottom line
Taking out or renewing a mortgage can be quick and easy. But if you're affected by rising mortgage rates or subjected to a stress test, complications will arise in a hurry. By following these tips, doing your homework and working with a qualified mortgage advisor, you're more likely to get the best terms, conditions and rate for your needs.

Did you know that we can assist you in obtaining a mortgage? Whether you're a first-time home buyer or a homeowner renewing an existing mortgage, our mortgage specialists can help you decide on the mortgage and debt solution that is best for you.

Give us a call, we are here to help.
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