Date: July 10, 2024

What are other Canadian’s doing on renewal ๐Ÿค”๐Ÿ‡จ๐Ÿ‡ฆ
Why are they choosing these options? ๐Ÿคทโ€โ™‚๏ธ

To continue with this month’s topic, let’s review: refinancing to add debt, or extend amortization and reduce monthly payment. ๐Ÿ’ธ๐Ÿ”„

Why would someone consider changing their mortgage at renewal? ๐Ÿคจ

On renewal, you have options:
๐Ÿ”น Renew with the current lender
๐Ÿ”น Move to another lender – switch, this is when you keep everything the same meaning your mortgage amount and your amortization will not change
๐Ÿ”น Refinance your current mortgage – this is the time to make changes since there is no penalty. You can add other high-interest debt and/or extend your amortization, change who’s on the mortgage amongst other changes.

Today, I want to focus on the latter: refinance your current mortgage. I hear it in your voices; there is much anxiety over upcoming mortgage renewals, and most of it seems to stem from the fact that Canadians are ending their current mortgage terms with rates in the sub-3% range and facing new rates in the 4-5% range. ๐Ÿ“ˆ๐Ÿ’ฌ

This will be the term where we will all feel the pinch, and so that has led many Canadians to extend their amortization and add other debts, such as car loans, into a mortgage to keep the monthly costs on par with what they are currently payingโ€”especially since all other areas of life have gotten more costly. ๐Ÿ’ก๐Ÿ’ฐ

Before you tell me that increasing your amortization or adding debt to your mortgage is a bad idea, I would implore you to review the reasons people do this:
๐Ÿ”น The increase in mortgage payments, along with current debt, make it unaffordable to live life.
๐Ÿ”น If they are adding an addition or renovating their home and have to borrow $100K+, they may want to extend the amortization out to help keep those costs down.
๐Ÿ”น If they have a child going into university or a maternity leave that is just starting, they may need to have access to additional funds as a backup, and then adding a line of credit is a great option. ๐ŸŽ“๐Ÿ‘ถ

Some of these reasons are why I believe that each term must stand alone within the 25-30-year amortization period. Because life is not math; it doesn’t fit nicely into an equation. There will be terms where you accelerate payments and add lump sums and pay that mortgage off faster, but then life happens and you have to slow down on the next term. ๐Ÿงฎ๐Ÿ’”

Your mortgage is similar to a voyage across the ocean; you know where it starts and ends, but in the middle, you have to adjust the sails to match the wind. โ›ต๐ŸŒŠ

I’d love to hear your thoughts, and if you have any questions about your upcoming renewal, let’s connect. ๐Ÿค๐Ÿ“ž
It’s not too early to start talking about your mortgage, even if your renewal is in a year. We need to start the conversation now. โณ๐Ÿ—ฃ๏ธ

Stay tuned for next week’s DYK as we review:
Taking an out-of-the-box approach that will allow them to pay off the current mortgage faster. ๐Ÿ“…๐Ÿ’ก

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