Are you looking for payment relief?
Do you want to start an investment for retirement?
Although, Canadians today face many reason for refinancing their mortgage, most people fit into one (or more) of the basic four categories:
- Reduction to monthly payments
- Consolidate consumer debts or multiple mortgages
- Equity take out
- Switching to a better mortgage product
Lower interest rates, extended payment time and access to equity are all attractive incentives for refinancing but you need to ensure that refinancing will improve your financial situation. Consider the following:
Will refinancing lower your interest rates?
- It is important to ensure that lower payments are a result of lowering your interest rates, and not simply extending the time it takes you to pay off the debt. A lower interest rate will not only reduce the payment immediately it will also result in significant savings over the course of repayment.
Trade a variable rate for a fixed rate.
- Variable rate mortgages are attractive when interest rates are low, but homeowners can quickly find themselves in trouble when rates begin to rise. Since fixed rates are at a record low consider locking in to stabilize your payments and make budgeting easier.
- If a mortgage with a 30 year amortization can be refinanced at a lower rate than reducing the amortization is a great idea. The result will be thousands, possibly tens of thousands, of dollars in saved interest. In most cases families will see a payment reduction and a reduction to the length of time it takes to repay the mortgage.
- If you have equity in your home and consumer debt, consider pulling out equity to pay off your higher interest consumer debts. The savings can be substantial.
Using equity to increase your property or investment portfolio value:
- Refinancing to remove equity from your home to remodel or expand your property is a great way to increase your property value. Many clients find that using the built up equity from their home is a simple way to start or expand an investment portfolio (in real estate or otherwise). Don't forget to factor in the tax benefits of owning an investment property.
Frequently asked questions:
How does this affect my credit?
- In the majority of cases refinancing will reduce monthly expenses and result in an improved credit score. The increase to your credit score is mainly due to the balance to limit ratio – which accounts for 30% of your credit score.
Do I need a lawyer?
- Yes. When you refinance you will be increasing the amount of your mortgage, and typically the terms and conditions will vary. In order to ensure that the new mortgage is registered correctly against the property and the old mortgage is discharged, a solicitor is required. However, this doesn't have to be an out of pocket expenses – many times our clients will include these costs in the refinance.
Can I pay out a consumer proposal?
- Yes. There are lenders that will allow you to consolidate your consumer proposal into your mortgage.
What debts can I consolidate?
Any unsecured or secured debts can be consolidated, including but not limited to: credit cards, lines of credit, vehicle loans, medical bills, cash advance loans, unsecured and personal loans, student loans, second and third mortgages.
Can I choose which debts I want to pay off?
Yes, you may choose to consolidate all of your debt or only select debts.
How do I get started?
If you are looking to lower your debt payments or simply pay them off quicker, let our experienced agents and brokers design a free analysis for you.