Mortgage Refinance Canada

We do not have experience with Canadian mortgages, and there may be significant differences between prepayments rules, interest rates and other terms, on mortgages for Canadian real estate and US real estate.

A couple of clarifications: 1) interest rates are not increasing (at least not in the US) as I write this in April 2010, and you should be able to find a new mortgage at around 5%, assuming your credit history is strong, you have available equity in your home, and your income-to-debt ratio is solid, and 2) confirm with your current lender/ servicer that you have a prepayment penalty on your loan. A five-year prepayment penalty is uncommon (prepayment penalties are slowly going away in US mortgages), so my sense is that you may have a balloon payment due in November. If that is the case, then there may be no penalty.

However, if you confirm with your lender/ servicer that there is a penalty, then calculate what the exact penalty will be (it should be 1% of your outstanding balance or less). If you refinance now, you are basically paying that penalty to offset the risk that interest rates will rise between now and November. If you decide to wait, the risk is that rates will increase between now and November. It is impossible to say with any certainty whether or not rates will rise, but they have been low for a year and a half, and they remain very attractive currently.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com