Is it smart to transfer my mortgage now?
In addition to health risks, the corona crisis brings economic uncertainty. Almost all mortgage lenders have increased interest rates slightly as a result. Does this mean that you must now quickly refinance your mortgage?
Never before have there been so many mortgage applications as in the past month. It is therefore the first time since 2018 that the mortgage interest rate has risen slightly again. But we shouldn't make it worse than it is: the mortgage interest is still very low. Even lower than in January of this year!
It is therefore a very small increase from 0.1% to 0.3%. To put this in perspective, on a $ 240,000 mortgage, that saves between $ 20 and $ 60 gross per month. If you weigh that against the costs of transferring, the latter is by no means always interesting.
If you want to refinance a current mortgage, you have to pay penalty interest. This is the amount that the bank is missing out on because you break open the contract. Depending on the difference between the old and the new mortgage interest and the remaining term, this fine can increase considerably.
In addition, you must take into account the consultancy costs. And if you take out your new mortgage with another lender, appraisal and notary costs will probably be added. This means that the transfer of your mortgage is quite expensive!
Do you have a (bank) savings mortgage? Then it seldom pays to transfer your mortgage. That is because the mortgage interest of a savings mortgage is linked to the corresponding savings interest. In other words: if you pay less interest, you will also receive less interest.
Whether it is smart to refinance your mortgage therefore depends on many more things than just the level of the mortgage interest. Do you want to know what is the best choice for you? Then please contact me. As an Accredited Financial Advisor I am a specialist in the field of mortgages. I would be happy to help you.