We knew that these ultra-low interest rates couldn\u2019t last forever. CIBC, TD and most recently, Royal Bank have all announced that their mortgage rates are going up by the end of the year and up again by the end of 2019.<\/p>\n
So the question is, should you renew your mortgage early in order to avoid the higher interest rates that are on the horizon?<\/p>\n
Unfortunately, the answer is not as straightforward as the question.<\/p>\n
Let\u2019s take a look at a few of the things you will need to consider:<\/p>\n
1.Variable Rate Mortgages<\/em><\/p>\n If you have a variable rate mortgage, you probably have the option to convert it to a fixed rate mortgage at certain points during the term. While this may give you some peace of mind, you will surely be paying a higher rate of interest once the mortgage is fixed.<\/p>\n The bigger the spread is between the variable and fixed rates \u2013 and the shorter your amortization period is, the less likely you are to benefit from converting it. You also need to remember that if you do convert from a variable rate mortgage to a fixed rate mortgage that there will be a higher penalty should you someday need to break your mortgage.<\/p>\n