Stop Waiting for Winter: Why October Is a Great Time for a Mortgage Check-Up
If you’ve been telling yourself, “I’ll deal with the mortgage after Christmas,” October might actually be a much better time to take a look.
That doesn’t necessarily mean refinancing your mortgage. In fact, sometimes the best advice is to leave your mortgage exactly where it is.
But with interest rates changing, household expenses still high and many Canadians carrying more expensive credit card or line-of-credit debt, fall is a great time to step back and make sure your mortgage is still working for you.
At Geri Janes & Associates, we call it a mortgage check-up.
Why Look at Your Mortgage Now?
Your mortgage was probably the right fit when you originally set it up. But life changes.
Maybe your income has increased. Maybe you've accumulated some debt. Perhaps you're planning renovations, helping a child with school, or simply finding that your monthly cash flow feels tighter than it used to.
Your home's value may have changed too.
October gives you a natural opportunity to review everything before the holiday season and the start of another year.
The question isn't simply:
"Can I get a lower mortgage rate?"
The better question is:
"Could my mortgage be structured differently to put me in a better financial position?"
That is a much more useful conversation.
Refinancing Can Be About More Than Your Rate
One of the biggest misconceptions about refinancing is that it only makes sense when mortgage rates drop.
Not necessarily.
A refinance can sometimes help homeowners:
Consolidate higher-interest debt
Improve monthly cash flow
Access equity for renovations or major expenses
Restructure their mortgage or amortization
Simplify multiple monthly payments
Create room in the household budget
For example, carrying a balance on a credit card at 20%+ while also having substantial equity sitting in your home may be worth reviewing.
That doesn't automatically mean moving the debt into your mortgage is the right answer. We need to look at the total cost, not just the new monthly payment.
Extending debt over a longer amortization can reduce your payment but potentially increase the amount of interest you pay over time. That's why we run the numbers before recommending anything.
What About Breaking Your Existing Mortgage?
This is where the math really matters.
If you're currently in a mortgage term, refinancing early could mean paying a penalty. There may also be legal, appraisal or other costs associated with making the change.
Before recommending a refinance, we want to know:
What does it cost you to make the change, and what do you gain in return?
If the savings or financial benefit don't justify the cost of breaking your existing mortgage, we'll tell you.
Sometimes our recommendation is simply:
Stay exactly where you are. We'll keep an eye on it.
That's part of our job too.
Could Consolidating Debt Make Sense?
If you're carrying credit cards, unsecured lines of credit, car loans or other higher-interest debt, this is one area where a mortgage review can be especially valuable.
Instead of looking at each payment individually, we look at the entire household picture.
For example, if you have:
Mortgage: $2,400/month
Line of credit: $450/month
Credit cards: $600/month
Car loan: $650/month
Your total monthly debt payments are actually $4,100.
There may be an opportunity to restructure some of those obligations and significantly improve monthly cash flow.
But lower monthly payments alone don't make something a good financial strategy. We also look at the interest cost, amortization, mortgage penalty and your longer-term goals.
The objective isn't simply to move debt around.
It's to create a plan to get rid of it.
How Much Equity Can You Access?
In Canada, homeowners can generally refinance their mortgage up to 80% of the home's appraised value, subject to lender qualification and approval.
For example, if your home is worth $800,000:
80% of $800,000 = $640,000
If your existing mortgage balance is $450,000, there could potentially be up to $190,000 of available equity.
That doesn't mean you should borrow $190,000.
It simply tells us what's potentially available. From there, we determine whether accessing any of that equity actually improves your financial position.
Don't Wait Until You Need to Refinance
This might be the most important part.
The best time to review your mortgage isn't necessarily when you're under pressure to make a change.
It's before you need one.
When we have time, we can review your existing mortgage, estimate any penalty, look at your home's value, compare available lender options and determine whether making a change actually makes financial sense.
And if the numbers don't work today?
That's okay.
We can continue monitoring the mortgage and revisit the opportunity when rates, your penalty or your financial situation changes.
Your October Mortgage Check-Up
Before we head into the final stretch of the year, ask yourself:
Has anything changed financially since I originally arranged my mortgage?
If the answer is yes, your mortgage may be worth another look.
At Geri Janes & Associates, we'll review the numbers and give you a straightforward answer. Sometimes there is an opportunity to save money, improve cash flow or restructure debt.
Other times, the smartest financial move is to do absolutely nothing.
Either way, you'll know.