Mortgage Refinancing
There comes a time for property owners when they will need to refinance their mortgage. According to the Canadian Mortgage and Housing Corporation (CMHC), mortgage refinancing allows borrowers to pay off the full mortgage amount on their existing mortgage by securing another one. However, the new mortgage comes with its terms and rate, which are completely different from the primary mortgage. Borrowers can use up to 80% of the property appraisal value of their home, and the best part is, the interest is low when compared to other types of personal loans. There are various reasons one should consider a mortgage as it has several benefits. For more information, get in touch with our team today.
How to refinance your mortgage?
There are various ways to refinance a mortgage. These include taking out a HELOC, breaking your mortgage contract early, or extending your mortgage with your current lender.
1. Ending your existing mortgage contract early:
If you want to attain a lower interest rate or access the built-up equity in your property, you might want to consider ending your mortgage contract early and taking on a new one with a different lender. However, prematurely ending the mortgage contract will see the borrower incur a pre-payment penalty from the bank, which is usually three months interest charges. If you can justify the cost with a new mortgage rate, then it is worth breaking the contract.
2. Taking out a Home Equity Line of Credit (HELOC):
A HELOC gives the borrower access to the equity in their property. It works similar to a credit card account. But because it is a secured loan, the interest rates are much lower. If you happen to take money from it, you will be responsible for payments on the outstanding balance. The equity can be accessed through your existing lender or from a small subset of mortgage lenders.
3. Extend your existing mortgage:
Your existing mortgage lender may offer you a blended rate, which is simply put a blend of your current mortgage rate, plus any additional money you borrow at current market rates. Blended rates are always higher than the most competitive mortgage rates on the market, so ensure you compare the blended rate against the savings if you choose to extend your mortgage with your existing lender.
Pros of mortgage refinancing:
✔ Potentially can get a lower rate of interest and save money
✔ Can consolidate all your high-interest debts at a lower overall rate
✔ Be able to access the built-up equity in your property
✔ Gives you the choice to swap to a fixed or variable rate
Contact Kingsdale Mortgage Centre for more on mortgage refinancing
To determine if mortgage refinancing is a good idea, please do not hesitate to get in touch with our team at Kingsdale Mortgage Centre today. We will explain and help you understand what your options are. Additionally, we can also identify the best deal and expertly guide you through the process. Contact us today to schedule an appointment.