Time to Renew: Catch the Best Rates Before They Slip Away!
Timing can be tricky, right? But here's the scoop – interest rates might drop around mid-2024. What can you do to snag a better rate sooner? Let's dive into your options!
How long will you have to wait for a lower rate?
When your renewal comes around, you're faced with the task of choosing a rate and term that will determine your mortgage payments for a set period.
Right now, mortgage rates are at a 22-year high, and there's buzz about potential rate drops in the next year (we promise you the best rates!). This adds a twist to your renewal decision-making.
Currently, short-term rates are higher than 5-year rates. Opting for a 5-year term might mean missing out on potential rate drops (but it offers protection if rates decide to misbehave and go up).
Despite the tricky situation, there are choices available to help you save the most during your renewal. Let's explore those options together!
Boost Your Savings: Smart Renewal Decisions to Make Today!
In planning to renew, think about how much risk you're comfortable with, the long-term savings potential, what fits your budget, and when you want to start enjoying lower rates. It's like finding the perfect balance for your wallet and peace of mind!
Choosing a short-term fixed rate could mean you get to enjoy lower rates again sooner when it's time to renew!
Choosing a 5-year fixed mortgage rate is quite popular among Canadian home buyers (picked 60% of the time). It offers stable payments for better budgeting and protects against rate increases for a longer duration, especially during uncertain times.
However, there's an interesting alternative to consider: opting for a shorter-term fixed rate, like 2 or 3 years. This choice might lead to a lower mortgage rate sooner, especially if interest rates are expected to drop in the next year or so.
The catch is, you'll experience higher payments initially due to the shorter-term rate. But if your budget can handle it, you could experience relief sooner compared to committing to a 5-year term.
Exploring the Perks (and Potential Pitfalls) of Variable Interest Rates!
Tired of waiting around in this high-rate town? Word on the street is that the Bank of Canada might be wrapping up its rate hikes. If you're looking to escape those towering rates, consider going for a variable rate mortgage. It could be your ticket to lower payments sooner.
While many rushed into fixed rates for a sense of security during the recent rate surge, some savvy mortgage holders stuck with variable rates. Surprisingly, only 15% of our clients chose variable rates this past summer, compared to the usual 30%.
But here's the scoop: If variable rates are at their peak, renewing with a 5-year variable rate means you can catch a break with each drop in the central bank's rates. No need to wait until the end of your term – enjoy the relief right away, assuming your payments can adjust.
Of course, there's a catch. Economic twists and turns could push rates even higher to combat inflation. It's crucial to assess if you can weather that storm and still come out ahead when rates eventually dip.
Quick tip: If you have a fixed-payment variable rate mortgage (VRM), be mindful that drops in the prime rate won't shrink your payments, just your overall loan duration.
How long can you hold off to renew?
Your contract is like a subscription that needs a renewal around 120 days before it expires. Don't snooze on this! You've got choices during this time – either stick with your current lender's offer or explore better deals with someone new.
Pro tip: If you procrastinate and hope for lower rates, you might miss the boat. You could end up in a temporary deal with a higher interest rate. Yikes!
So, why not chat with your mortgage expert ASAP? They can check out your best options, and if there's a chance rates might rise, they can lock in a good one for you. Even if you take some time to decide, you can still snag a lower rate if they drop before you make it official. Stay savvy!
Extend your amortization while you wait!
If you go for a 5-year term or even a shorter one, you can tweak your payment schedule by extending your amortization. It's like giving yourself some financial breathing room. So, even if you renew into a higher mortgage rate, your payments might actually get lower.
This clever move could ease your budget worries until the magic moment when you can snag a lower rate and more affordable payments. It's like a strategic game plan for your wallet, especially if interest rates decide to play nice at your next renewal!
Can you break your 5-year term for a lower rate?
Imagine you're on a financial journey, and some folks prefer the steady path of a 5-year fixed rate. But what if, during those 5 years, interest rates drop significantly? You get to decide if breaking your contract early is worth it, weighing the penalty against the savings of starting a new term at lower rates. It's like having the flexibility to adapt to changing financial landscapes!
Solve your renewal dilemma with great advice.
Meet our awesome team of mortgage experts! They're skilled, ready to guide you through the maze of home loans. Say goodbye to biased advice – we're all about putting you first. Our track record speaks for itself with a bunch of 5-star reviews, thanks to our knack for making the mortgage process easy and stress-free.
Navigating the current high-rate market to buy a home and manage your payments can be a bit tricky. But fear not! We're here to obsessively help you discover the perfect renewal strategy, especially in these challenging times. Let's make your mortgage journey a breeze!
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