Today's low borrowing rates have many people with mortgages wanting to take advantage of lower rates.
It's a great issue, but it really depends what stage your mortgage is at. If you are coming up for renewal in the next six months, now might be a good time to begin shopping around.
You can get a good sense of where mortgage rates are by going to a mortgage broker or into your bank or credit union. But the rate isn't the only important feature.
You need to ask how the rate is calculated and compounded. It's also important to understand what the pre-payment options are -- like if you can double up on payments or put down lump sums every year.
And it's good to know what the pre-payment penalties are. Those penalties can be very, very large.
You also want a mortgage that is assumable or transferrable, as well as portable. Assumable means if you sell your house the new buyer can take it over and portable means you can take it with you to a new home without penalty.
One way you can get a lower rate without penalty on your five-year, fixed-rate mortgage is what they call a 'blend and extend.' The bank takes the rate you are paying for the next few years, blends it with today's lower rate, and extends your mortgage back to five years.
So if you are paying six per cent for the next two years and a five-year mortgage today is four per cent -- you might get a new five-year mortgage at something less than five per cent.
It's an advantage for both you and the lending institution. They get to keep you as a customer and you get to pay a lower rate today.
With a report from CTV British Columbia's Chris Olsen
