There are many reasons why you might want to review refinance options:
- to increase your existing mortgage for investment purposes,
- consolidation of non-mortgage debt,
- to finance improvements to your home
Let us assist you with negotiations with your existing lender or switch you to a new lender who may give you a more favourable rates and terms.
There are many factors to consider when refinancing your mortgage. Here’s what you need to know:
Access Equity for investment
If you are contemplating investing in Real Estate and want to use equity that you have created in your residence as down payment monies it is vital that you begin the process before making offers on properties. Some lenders limit the number of multiple properties in a personal portfolio. This can create a very stressful situation if you are trying to complete multiple transactions at once. i.e. a refinance of your home and a finance on a new property.
It is all about taking the right steps at the right time and creating access to said equity well in advance of requiring it.
If your plan is to move from your current residence and rent it out, then once again creating the proper mortgage structure in advance is vital and can save you thousands, tens of thousands of dollars.
Consolidate other debt
Most unsecured debt is priced by your bank at a much higher rate than your mortgage. For many people it only makes sense to use available home equity to pay out this high interest debt. If the total of the existing mortgage and the debt to be refinanced is less than 80% of the value of your home, and you qualify in terms of income and credit standing, refinancing your first mortgage should be a breeze.
Renovations & home improvements
If you plan to spend a significant amount of money on improving your home, you may have access to a lot more equity than you realized! Not all improvements are eligible, however. Pools and spas are typical “over-improvements” which may not qualify for a high-ratio equity take-out. We can advise you through this process.
Breaking a closed mortgage to transfer to a new lender
Many closed mortgages have the feature that allows the balance to be paid out with a penalty after a certain time has elapsed on the mortgage. Check the “prepayment” clause in your mortgage to determine your own situation, or better still, call your institution and ask them the cost of paying out in full.
The most dramatic savings for clients today is for those who entered into a 10 year fixed mortgage 5 years or more ago. The penalty to break this onerous mortgage is only 3 months interest and the savings is rapidly recovered at todays far lower rates.