After signing their mortgage, many homeowners forget about it, until it comes due for renewal. With changes in the mortgage world happening all the time, your mortgage broker or banker should be able to help you find ways to improve your financial health, say mortgage professionals.
Here are five questions to ask those professional:
Do the Stress Test rules apply to me?
The test was designed to ensure borrowers would be able to pay their loan if interest rates increased. But the rules do not apply to mortgage renewals, as long as they are with the borrower’s existing lender. You may even be able to move your existing mortgage to a new lender for better rates, without having to apply the stress test.
Does refinancing make financial sense to access my equity for other things?
Even with mortgage payout penalties, your savings could be significant. This could help you increase cash flow by eliminating credit card balances or lines of credit. This in turn may allow you to increase your mortgage payment to pay it off faster and save interest. Maybe your properties need maintenance, or you’re wanting to renovate. Leveraging your equity can also play an important role in successful investing.
Is there room for improvement in my mortgage structure?
If you own more than one property or want to pursue tax-deductible investments, changing your mortgage structure can save you money at tax time. For example, many multi-level mortgage products allow you to separate non-deductible mortgage payments from your deductible mortgage interest.
When should I lock in my variable-rate mortgage?
Current fixed rates are often lower, so if you plan to keep the property for a long time, it’s worth having your professional do a comparison between fixed rates and your current variable rate. A key consideration are the penalties charged for breaking the mortgage contract early.
How can I pay my mortgage off faster?
Mortgage payments determine amortization length: the higher the payment, the lower the amortization; the lower the payment, the longer it takes to pay the mortgage off. One strategy worth looking at is extending amortization on revenue properties and reducing it on your residential mortgage.
If you have other mortgage questions, talk to your mortgage professional.