With homeowners carrying higher balances on their lines of credit, lowering the cost of a line of credit is becoming more important. The high cost of living in many parts of British Columbia is forcing some homeowners to use their line of credit to cover expenses or pay off their credit card each month. The result is a larger overall balance and higher cost of borrowing on the line of credit.
For homeowners with a mortgage up for renewal in 2020 who also carry a balance on their line of credit there are options to lower the overall cost of borrowing.
For example: Sarah and Jeff bought their first home in 2010 with 10% down. There mortgage was $500K. Along the way they added a secured line of credit. At their renewal in early 2020 they will have a balance of $350K on the mortgage portion and $50K on the line of credit for a total balance of $400K. They were offered a mortgage renewal with their current lender. They want to keep the line of credit in place but may want to roll the current balance into the mortgage. We provided them with options and also secured a lower rate on a transfer to another lender. This saved them over $10,000 in interest over the 5 year term by lowering the cost of a line of credit and a better rate on the overall mortgage.
As you start a new decade consider a review of your financial picture and contact your independent mortgage broker.