When you refinance your mortgage, you’re essentially taking out a new loan to replace your old one. This can be done for various reasons, such as to lower your monthly payments, change the term of your loan, or tap into the equity you’ve built up in your home.
Alberta has some of the country’s most favorable lending laws, meaning borrowers have more protection than in other provinces. For example, the maximum interest rate charged on loans in Alberta is 30%, which is lower than the national average of 60%. Mortgage refinancing in Alberta is also easy to access. This means you’re less likely to get caught in a cycle of debt if you take out a loan in Alberta.
The average rate in Alberta for a 30-year fixed-rate mortgage dropped to 3.64% as of August 2020, down from 4.72% at the end of 2019, according to Freddie Mac. This marks the lowest average rate on record, dating back to 1971.
There are a few things to keep in mind before refinancing, such as whether or not it makes financial sense for you and if you’ll be able to qualify for a new loan.
- Research your options: There are various mortgage products available, so it’s crucial to compare rates, terms, and conditions to find the best deal.
- Know your credit score: Your credit score will impact the interest rate you’re offered, so it’s essential to know where you stand before you begin refinancing.
- Consider your motivation: What is your reason for refinancing? Is it to lower your monthly payments, get cash out of your home equity, or something else? Knowing your motivation can help you choose the right type of mortgage product.
- Compare costs: Refinancing comes with closing costs, appraisal fees, and more. Be sure to compare these costs against the potential savings from refinancing to ensure it makes financial sense. In Alberta, a loan’s maximum allowable interest rate is 30% per year. If you want to take out a loan with a lower interest rate, you may want to consider another province.
- Get pre-approved: Getting pre-approved for a mortgage can streamline the refinancing process and help you better understand what you can afford.
- Shop around: Don’t just go with the first mortgage offer you receive. Compare rates and terms from multiple lenders to ensure you’re getting the best deal possible.
- Know your timeline: There may be a prepayment penalty if you refinance too soon, so be sure to factor that into your decision. In Alberta, the minimum repayment period for a loan is six months. If you’re looking for a more extended repayment period, you may want to consider another province.
- Consider your tax implications: Mortgage interest is tax-deductible, so be sure to consider how refinancing will impact your taxes. If you are a homeowner in Alberta, you may wonder if now is an excellent time to refinance your mortgage. With interest rates at historic lows, many homeowners are taking advantage of mortgage refinancing in Alberta to save money on their monthly payments.
- Get everything in writing: Be sure to get all the details of your mortgage agreement before you sign anything.
- Ask questions: If you’re unsure about anything during the refinancing process, ask questions to make the best decision for you.
To conclude, Alberta’s economy is strong, so now is an excellent time to take advantage of low-interest rates and high home values. If you are considering refinancing your mortgage, now is a great time to do so in Alberta.