Help clients review their mortgages

A client’s mortgage has to suit his or her needs, and many factors must be considered when mortgages come up for renewal.

Things to consider when refinancing a mortgage:

• Do your research: Your client may be looking for better payment certainty and rate protection, which their current variable-rate mortgage doesn’t provide. If it makes sense, suggest they consider a fixed-rate mortgage.
• Review their financial situation: Is reducing amortization an option? Moving from a 30-year to a 25-year amortization on a $400,000 mortgage (at a 5% interest rate) saves upwards of $70,000 in interest over the life of the mortgage.
• Stress test the budget: Interest rates have hovered near historic lows but are set to climb within the next 12 months. Stress-test the mortgage at a higher rate to ensure elevated payments are manageable.

Read: Mortgage repayment is possible: CIBC

A recent BMO study found homebuyers want payment certainty for as long as possible. The majority (65%) of Canadians are looking to lock in at a fixed rate and take advantage of low interest rates.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.