Plan Now for your Mortgage Renewal !
February 6 2018 Posted by Lisa Pellerin
Start Planning Now for your Upcoming Mortgage Renewal !
The best plan to prepare for your upcoming mortgage renewal is…. just that, a plan.
Mortgage rates have recently increased and the expectation is that they will continue to do so this year, including the Bank of Canada Prime lending rate which we have already seen.
There will be a large number of mortgage renewals coming up over the next 1-3 years as the real estate market has been booming in recent years and interest rates have been at historically low levels.
I would love to tell people that their renewal rate will start with a 2! However, a more realistic rate market is now approaching and for those that have been enjoying these ultra-low rates, the party is over.
Or is it?
Rates are still in the low 3s which is an excellent rate when not too many years ago, the average 5 year mortgage rate was in the 5% range. Regardless, renewal rates will most likely be higher which means an increased mortgage payment. It is common for us to adjust our budget and spending around our fixed costs and not leave room for increases, we've quickly adpated to the these lower rates and payments.
My advice and recommendation is to start planning now for a higher mortgage rate and payment.
Here is a chart that shows an example of a $300,000 5 year mortgage term at 2.90% vs. 3.90%.
You can see that in this example, there is a payment difference of $78 every two weeks or $156 per month which represents an approximate 11% increase per payment. I hope if you are paying your mortgage on a monthly frequency that you have already increased your monthly payment!
Plan for your renewal now and bump up your mortgage payment.
We are implementing strategies to help clients take advantage of today’s rates. Please contact me to review your mortgage details, firstname.lastname@example.org or 905 464 3444.
Thank you - Lisa