The cost of living is constantly rising. Reducing monthly expenses reduces the risk of overspending. One way to cut back on spending is looking to the best mortgage rates in Toronto.
Your mortgage likely takes up a large chunk of your monthly payments, along with vehicles and insurance. Reducing mortgage costs can vastly improve your annual expenditures overall.
At Northwood Mortgage, we work with clients across Ontario, customizing mortgages to fit your lifestyle. We understand that no two homeowners are the same, and therefore, your mortgage should be bespoke to your needs.
Here, we’ll talk a little bit about reducing monthly expenses, specifically in the form of mortgage rates.
Refinancing for the Best Mortgage Rates in Toronto
One way to change your current mortgage is to refinance. Refinancing involves negotiating with your lender to change your current mortgage agreement. It might involve the consolidation of debts, or changing your mortgage loan amount based on new equity.
To reduce your payment, you’ll probably want to do what’s called a rate and term refinance. These changes are reflected in interest rates, which in turn bring down your monthly payment.
Repayment Term Extension
Another way to lower mortgage costs in Toronto is to extend your repayment term. A standard Ontario mortgage has a 5-year term and a 25-year amortization period. What does this mean? That the first 5-years of your mortgage keep you locked in with your lender and rate.
After the initial 5-year term, you can apply to make changes to your mortgage, although the life of the mortgage has 25 years remaining.
Extending your mortgage adds additional years to your remaining repayment time, lowering the rate you pay monthly. For example, if you have 10 years left on your initial 30-year mortgage, you could extend that 10 years to 30 years to reduce the payment.
Lose the Private Mortgage Insurance
Depending on your downpayment, you may have been required to pay for PMI (private mortgage insurance). Generally, this is required of home buyers who put down less than 20% of the house price as a downpayment.
PMI is additional insurance on top of your standard mortgage payment. It protects your lender but costs you thousands over the life of your mortgage. You can reduce or remove PMI after gaining a minimum of 20% of the equity in your home.
Make a Large Downpayment
This is a proactive step when purchasing your home. The downpayment you make impacts many things, including mortgage rate and, as you saw above, insurance products. Making at least a 20% downpayment will ensure your mortgage payments are reasonable for the value of your home.
Contact Northwood Mortgage for the Best Mortgage Rates in Toronto
Looking to change your mortgage? Northwood Mortgage offers the best mortgage rates in Toronto. As a local broker, we work with top lenders across the country, ensuring our clients get suitable rates based on their need and lifestyle.