December 9, 2008
Mark Roozendaal (Re/Max Camosun)
As you have most likely heard already, the Bank of Canada dropped their key lending rate by a massive 0.75%. Canadian banks are expected to follow suit and drop their prime lending rate. If you have a variable rate mortgage this means you'll automatically pay less in interest. That's kind of nice!
If your mortgage is locked in at a set interest rate you don't get the savings! But, there is some good news for you as well. Most mortgages give you the ability to pay a penalty, often 3 months of interest, to get out of your current mortgage early. Then, you may be able to refinance at a lower rate.
Whether this makes financial sense for you depends on the length of the term remaining in your mortgage and your current interest rate. It is worth your while to ask your your mortgage broker, or bank, to do the calculation for you. You could save thousands.
While refinancing, you may also want to consider taking additional equity out of your home to buy a second property. It's no secret that there are a lot of sellers who are highly motivated and some great deals are out there. Our local rental vacancy rate is still extremely low so you can count on finding a good tenant.
If you would like to discuss revenue property opportunities, or need a recommendation to a mortgage broker just drop me an email anytime.