Mortgage thoughts and strategy

I wanted to get thoughts on strategies around my mortgage and how to take advantage of it.

Current mortgage: conventional 25-year mortgage, 7 years into it, variable rate of 1.75% as it stands now. Balance remaining of about $190000 with a biweekly payment of around $600.

Thoughts I have around this are:
1. keep things as is
2. refinance and lock in at a fixed rate for 5 years, maintaining current repayment schedule which has 18 years left in it: certainty on rates, may or may not save money after penalty which is three interest payments
3. refinance as in point 2, but extend the mortgage to 25 years
4. refinance as in point 2, but extend the mortgage to 30 years
5. refinance and take equity out but keep payments at current levels, and use equity for other investments

The idea with options 3 and 4 are that they would lower my monthly payments, but with the thoughts of paying down aggressively by doubling payments or even doing lump sums as allowed within the year, but having the luxury of a lower monthly payment option should the need arise (for example: uncertainty with employment, ability to purchase other properties.)

Do any of the above not even make sense?

I don't see the motivation to extend the term unless you have suffered a job loss or some other reduction in income.

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Originally Posted by ee2k

Do any of the above not even make sense?

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Not really. You're over complicating things.

Is it up for renewal? seems odd that it would be outside of an increment of 5 years.
If there's any penalty involved, the right answer is likely do nothing.

variable is the way to stay. There are better rates then what your currently paying if you shop around.

You can refinance at anytime if your on variable so not sure why you'd lock anything in now when variables rates are so good and will be for sometime

Deal with the job loss if and when it happens.

I'd just stay as is tbh. 1200/month isn't a large amount so extending it to reduce it to say 1000/month really doesn't make a big difference for investing the difference to try and gain on low interest rates. Likewise doubling payments is always a good idea but you save so little is also doesn't make for much savings.

I'd just keep it as is and focus any extra money you have on growing your non real estate investments

Option 6. Leave it alone; if your lender offers a heloc, add that on. If not do a transfer at renewal to an all in one product that offers one.

You have a few things working against you here:

refinances have higher rates
It’s a recession; some lenders have lowered LTV for Calgary refinances
It’s a recession; your house probably isn’t going to appraise out how you think

Thank you all for the reply.

What Disoblige said. Mortgage is really not complicated if you want to tackle it aggressively so you can really start building wealth with no other debt.

Instead of thinking about how lower monthly payments mitigate employment uncertainty, maybe also think about your emergency fund if you don't have one.

Everyone should have an emergency fund of 3-6 months set aside.

3 and 4 aren't terrible in theory (assuming no penalty), but unless you're extremely disciplined you likely won't be banking/investing the monthly savings to use towards lump sum payments and instead will just spend it on useless shit.

So yeah i vote option 6 - do nothing, and if you lose your job then deal with it then.

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Originally Posted by sabad66

if you lose your job then deal with it then.

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Not dealing with shit if you’re unemployed :rofl:

This is why you heloc though... write interest off for investing with it, and have a cheap emergency fund to access if need be. No dead capital sitting around in an “emergency fund”

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Originally Posted by ercchry

Not dealing with shit if you’re unemployed :rofl:

This is why you heloc though... write interest off for investing with it, and have a cheap emergency fund to access if need be. No dead capital sitting around in an “emergency fund”

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Is that like one of those Manulife One accounts? Are there any other FIs that have similar products? been meaning to look into those at some point.

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Originally Posted by sabad66

Is that like one of those Manulife One accounts? Are there any other FIs that have similar products? been meaning to look into those at some point.

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Yeah, that one is a little more unique with the whole “main bank account” thing. But Scotia STEP is similar. RBC also is similar, basically any of these banks that register a 100%+ collateral charge on title have some sort of flexibility in adding different secured products to your portfolio