Rising rates affect more than just consumers looking to purchase a home and take out a new mortgage.  Current mortgage rates are still at historical lows, though this may not be the case for long.  If you are part way through a fixed term, it may be worth considering doing a ‘blend and extend’.  This is where financial institutions who offer this option will not charge you a pre-payment penalty to break your mortgage, but will allow you to blend your existing locked in rate with the current fixed term rate and lock into a new term of your choosing.  Many homeowners who locked in over 5% stand to save thousands by blending to a lower rate.

Similarly, if you have a low rate, but only a year or two left on the term, you may consider the peace of mind of extending your term to keep a low rate locked in for a longer period.  If rates are even one point higher when your mortgage comes due, be prepared for a significant increase to your monthly payments.  Just a one point increase in interest rates would increase payments by approximately $1700/year on a 250k mortgage.

Homeowners who may be considering refinancing their current mortgage at some point in the next year or two may also want to consider doing so now to take advantage of the still very low rates.

There are many things to consider when making a change to your mortgage.  If you would like some guidance when considering your options or to learn more about how to guard against rising interest rates, please contact us at info@ethosrealty.ca.