October 30, 2018 Kristen Godel

When is the Right Time to Refinance My Mortgage? Should I Wait Until My Maturity?

It is very common for home owners to struggle with this question especially when they are nowhere near the maturity of their existing mortgage. In order to complete a mortgage refinance there are a few things ones should consider.

The first, is to consider the reasons you would want to complete a mortgage refinance. For many people, it’s to consolidate their debts, while for others it’s to get some extra cash for renovations. Once you determine the motivation, you would then need to assess the consequence completing the mortgage refinance. The main concern is breaking a mortgage is the penalty it may trigger with the existing institution that holds the mortgage. Most homeowners believe that their mortgage penalty would only be 3-months interest penalty but that’s not always the case. We always recommend that homeowners give their institution a call to ask what their penalty would be if they were to break their mortgage. More often than not, our clients are surprised to learn that their mortgage penalty is much higher than their initial estimations, while in other examples, they are pleasantly surprised to learn that it is much less.

In any case, the reason it is important to learn this information when thinking about doing a mortgage refinance, is to then consider the benefits and costs associated with approaching the mortgage refinance before the maturity of the existing mortgage. Sometimes you may consider the costs are worth the benefits because of what it ultimately achieves. For example, it may cost our client $5,000.00 to break their existing mortgage, but the refinance would get them a better mortgage rate and allow them to consolidate their outstanding debts, while increasing their monthly cashflow by $1000.00 per month. In this example, its all about the perspective of the borrower and the value they see (or don’t). If the home owner assesses their personal circumstances and determines that it is of more value to complete the mortgage refinance now than wait until their mortgage matures, then they will proceed with the process. On the other hand, the same borrower may decide that they can wait until the end of the term to complete the mortgage refinance. As you can see, it’s a combination of their personal motivation (reasons/needs) compared to the costs associated with the mortgage refinance.

If you are interested in learning more or would like to discuss your personal situation to see if a mortgage refinance is right for you, please feel free to contact us today! – 905.455.5005.