Refinance your home loan

Smiling couple sit in office, prepare to sign papers as man hands over pen.
G-Stock Studio / Shutterstock

During the past year, as millions of Canadians twiddled their thumbs at home, many took advantage of remarkably low mortgage rates to upgrade to a bigger prison. That turned up the heat on an already scorching real estate market.

While higher prices mean first-time homebuyers will still struggle to get a foot in the door, today's ultra-low rates mean Canadians who already own a home can potentially save thousands by refinancing.

As a rule of thumb, if your credit score is in good shape, you have at least 20% equity in your home and your current mortgage rate is 0.75% higher than current published rates, it’s time to look into a new deal.

Keep in mind your home’s rising value also offers an opportunity to leverage your equity for all kinds of needs, like funding home improvement projects or paying down high-interest debt. (If you live in the Greater Toronto Area, you can find out how much your home is worth in about two minutes.)

Good credit is important for your financial health, and Borrowell can help you take a turn for the better. Sign up for Borrowell to get your credit score and credit report for free!

Sign up

Consolidate your debt

Couple seen from above looking t piles of bills, holding a calculator.
Rawpixel.com / Shutterstock

The pandemic made it difficult for anyone to travel, eat in restaurants or spend on retail purchases, and many used the money they didn't spend on those activities to increase their savings and pay down debt.

With little to do, many Canadians saved more than they ever had before — with the savings rate surging from 1.4% to an incredible 14.8% in 2020, according to the Conference Board of Canada.

At the same time, families that lost work during the downturn have been struggling to make ends meet. A quarter of Canadians had to take on more debt, one in five had to raid emergency savings and 14% used credit cards to cover monthly expenses, according to a survey by consumer insolvency firm MNP Ltd.

If you’ve been relying on credit cards or other forms of high-interest debt to carry you through, the monthly drain on your bank balance will add up quickly.

For those who can’t borrow from their home equity to pay off card balances, a debt consolidation loan could help you get out of debt sooner and save you a ton on expensive interest.

Work on your credit score

business hand pushing excellent credit score on virtual screen interface
pichetw / Shutterstock

While today's low rates allow people with even middling credit to find an affordable loan, that will change when rates go up.

Take a free peek at your credit score, because now’s the time to work on improving it. When borrowing costs are higher overall, it's even more important to unlock the lowest possible rate.

Boosting your credit score will make you more attractive to all types of lenders, from credit-card issuers to those offering mortgages.

Get a $50 bonus when you open and fund your first Wealthsimple Invest account* (min. $500 initial deposit). Trade and Cash accounts are not eligible. Sign up now to take advantage of this special offer.

Get started

Refinance your private student loans

hat graduation model on coins
ITTIGallery / Shutterstock

As with other forms of debt, missing payments on your student loans can tank your credit score and make it harder for you to rent an apartment, buy a home or even get certain jobs.

But if you’ve been struggling to make your payments, your first move shouldn't be a refi. Instead, check whether you qualify for a government Repayment Assistance Plan.

Why? Even though it's easy to get a good rate on a private loan right now, refinancing a government loan through a private lender will disqualify you from student tax credits and other support.

However, if you already took out a private loan or line of credit to cover excess education costs, refinancing today could offer serious relief. Be sure to compare loan offers from multiple lenders to lock in the lowest rate possible.

Find better returns in the stock market

Close up of man casually looking at stock market charts on a tablet.
NicoElNino / Shutterstock

While the low interest rate environment is great for borrowers, it also means you'll earn next to nothing if you dump your cash in a savings account.

If you’ve got the appetite to take on a bit more risk, consider investing your extra money for a much stronger return. Keep in mind, some popular platforms allow you to invest your cash for free.

And even if you only have a few loonies to spare, you can sign up for an account that invests for you using your “spare change.”

You're 5 minutes away from the best mortgage

Searching for your perfect mortgage shouldn’t be hard.

Homewise is an online brokerage that will negotiate on your behalf with more than 30 big banks and other lenders, completely free, and it only takes five minutes to apply.

If you're in the market for a new mortgage, or if you're looking to refinance before interest rates rise again, go to Homewise now and answer a few simple questions to get started.

About the Author

Sigrid Forberg

Sigrid Forberg

Reporter

Sigrid is a reporter with MoneyWise. Before joining the team, she worked for a B2B publication in the hardware and home improvement industry and ran an internal employee magazine for the federal government. As a graduate of the Carleton University Journalism program, she takes pride in telling informative, engaging and compelling stories.

What to Read Next

Disclaimer

The content provided on MoneyWise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.