Having regular checkups by a doctor is critical to ensuring good health. The same concept holds true for one of your most important financial investments: your mortgage.
Plenty can change in someone’s life during the standard five-year mortgage a lot of Canadians sign up for. You may need to change your mortgage because of a career change, having kids, or entering retirement.
Canadians tend to become complacent about their mortgage payments when they could be saving a lot of money. For example, the more adverse you become to risk, the less likely a variable mortgage will be right for you. Using online tools, such as a mortgage calculator and a mortgage penalty calculator, you can determine how much you can expect to pay if you break your existing mortgage.
What is a Mortgage Check-Up?
It is a process used to compare your current mortgage rate and product to today’s rates and available products. It will help you determine the product that is best suited to your needs. It will also assist you with making the choice between a Variable Rate Mortgage or a Fixed Rate Mortgage?
The process takes into account your current mortgage rate, outstanding mortgage amount, and remaining time left in your term, and compares it to today’s rates and products. It will give you the information you need to make a smarter decision with your mortgage and help you pay it off faster.
With the large variety of mortgage products available today, there is a good chance that there is one that suits your needs better than the one you have now.
How often you should make a mortgage checkup?
Many financial advisers recommend that you do a mortgage checkup once a year, and several Canadian mortgage companies offer this service free on their website.
It may be worthwhile to renegotiate your mortgage or increase your payments. An extra payment of $100 a month on a standard $200,000 mortgage could save almost $18,000 in interest and shorten the amortization period by about four years. Many banks allow people to pay a lump sum of the principal on the mortgage’s anniversary and increase their monthly payments. This is a golden opportunity that you should take if, for example, you received a tax refund, applying that refund to your mortgage, rather than making a personal purchase, can save you significant money.