Refinancing Your Home

There are many reasons to refinance your mortgage. Many people refinance to do home improvements, purchase another property, pay for post secondary education or to payout debts and save money! If interest rates are lower than when you took out your mortgage or if you have higher interest rate debt,   refinancing can get your monthly payments back under control while paying down your debt – not just the interest.

What is Mortgage Refinancing?

Refinancing is taking out a new mortgage, repaying the existing mortgage and borrowing against your equity.  The maximum you can borrow is 80% of the homes current appraised value less any outstanding mortgage and penalty. There is typically a cost to do this as the old mortgage must be discharged and the new mortgage registered on title. Some lenders offer in house legals to cut down on the cost.  There are many reasons to refinance your mortgage. Many people refinance to do home improvements, purchase another property or to payout debts and save money! If interest rates are lower than when you took out your mortgage or if you have higher interest rate debt,   refinancing can get your monthly payments back under control while paying down your debt – not just the interest.

Debt Consolidation

Many people carry credit card debt or lines of credit that are at higher interest rate than current mortgages and unlocking your equity to save the interest costs can not only improve monthly cash flow but in many cases reduce the years you have to pay on your mortgage.  You can use your mortgage equity to pay off your bills sooner and with your bills consolidated, your interest and payments will dramatically reduce. Over-extended credit card and consumer debt is the number one problem Canadians face today. We can provide a no cost, no obligation consultation to determine if there are interest savings available to you.

What are the disadvantages of a mortgage refinance?

While refinancing a mortgage can save a large amount of money, it can also cost money. Most mortgages have a prepayment penalty that is charged when breaking its terms. This fee can be a significant amount, making it important for borrowers to find out if they will face a prepayment charge, and if so, how much. The whole point of refinancing is to improve a borrower's financial decision, so if a prepayment charge will result in financial stress that will not be improved through a refinance, it may be wiser to stay with the current mortgage.  Often lenders will work with us and provided a 'blended' interest rate to avoid the penalty. This can also make sense depending on current interest rates.  In addition, costs associated with closing a loan will apply to a refinance. Our agents will help you determine if breaking your mortgage to refinance and paying an early payout penalty will save you money in the long term. If so, the prepayment penalties can be absorbed into the new mortgage loan, leaving you without any out-of-pocket expenses to pay