2023 is finally here. Can you believe it? We all know that the new year is a time for making personal resolutions, evaluating your involvement in memberships and affiliations, writing business plans, and getting back on track with health and fitness. It is also a great time to do a mortgage checkup, and make sure your mortgage is working for you the way it should be.
A mortgage isn’t something you sign once every few years and then forget about during the time in between. Life and circumstances can change substantially in a year, and a regular review can help ensure that your mortgage is still the right fit for your lifestyle and your situation.
Private Lenders Share Mortgage Checkup Tips
The types of things you should look at when conducting your new year mortgage checkup are:
1. Interest rate;
2. Payments and other mortgage terms;
3. Available home equity;
4. Life changes that have occurred over the last 12 months;
5. Have your mortgage goals changed?
Why is a New Year Mortgage Checkup Important for Your Financial Goals?
If you’re a homeowner, a new year mortgage checkup can be an excellent way to ensure that your mortgage strategy aligns with your current financial goals. Here’s why a mortgage checkup is essential:
- Get Mortgage-Free Faster: If you receive extra cash, like an inheritance, tax refund, or a work bonus, consider putting it toward your mortgage. Every extra dollar you pay down on your mortgage saves you money in interest and helps you pay off your mortgage faster.
- Reduce Your Monthly Payment: Negotiating for a lower interest rate can help you lower your monthly payments and use the extra funds to improve cash flow or build a rainy-day fund.
- Consolidate Your Debts: By consolidating high-cost consumer debt like a credit card balance into your mortgage, you can save money on interest and boost your cash flow to build up a savings account. You can also pay off your debt faster, helping you achieve your financial goals sooner.
- Access Lower-Cost Funds: Consider a Home Equity Line of Credit (HELOC) to access lower-cost funds to top up your investments or TFSA contribution for the year. A HELOC can also help you pay for renovations, vacations, or even free up funds to gift to your kids or grandkids for a down payment on their own first home. These lines of credit have flexible terms and typically no penalty to pay them off entirely at any time.
- Improve Your Credit Score: A strong credit score increases the number of borrowing options available to you. The stronger your credit score, the lower interest you pay when you borrow money, reducing your total cost of borrowing.
All, some, or none of the above options may be a fit for your family. There can certainly be pros and cons to each of the above options depending on your unique circumstance, but knowing what these options are can put you at an advantage if you ever need to make changes to your financial strategy.
A key part of educating our clients and building positive relationships with them is working with them through the entire mortgage process while assessing their lifestyle and understanding their goals. Helping them to get mortgage ready, stay mortgage balanced, and ultimately get mortgage-free faster is our business.
In some cases, a mortgage checkup may show that a refinance home loan could improve your mortgage strategy. In other cases, the best plan of action may be no action at all. If you’d like some help figuring what options might be best for you, contact our team of Kelowna mortgage brokers today! We have an extensive network of private lenders in Kelowna and would be happy to help you find the best options for your financial needs.