Mortgage Rate Refinancing Advice

by Happy Homeowner

Regarding this mortgage rate and refinancing advice
Note from Kate: I enjoyed this refinancing advice from a Reader but I need a little clarification with terms. Can anyone help? Read what our refinancing homeowner advises and see if you can help me.



Kate, we locked in a mortgage for a fixed term - not the life of the mortgage. The rate at the time was reasonable compared to prevailing variable rates.

As benchmark interest rates have declined, initially at a medium pace and then rapidly in relation to the global financial crisis, the fixed rate vs variable rate difference has increased.

Instead of negotiating a fixed to variable transfer in the middle of the fixed term (which would have been quite expensive), we've been happy to re-lock at a lower rate owing to the decline in underlying rates and the natural cycle of our fixed term.

All in all, waiting another 3-4 months for this to happen was cheaper than breaking. Then again, having the opportunity to relock at approximately 5% below where our initial locked rate was is certainly a good option - especially given then underlying interest rates are likely to remain so low.

Kate's Mortgage Rate and Refinancing Advice

Dear Happy Homeowner, I read your refinancing advice a couple of times not understanding your terminology until I realized you might own a home in Canada or somewhere else outside the US? Am I right?

Would you or someone else please comment and let me know what "breaking" entails and why it would be more expensive.

I hope you'll come back to my website again in the future. Of course, all of my information is free.

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Best Wishes,






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