Refinancing Your Mortgage
Elevate Your Finances
Refinancing your mortgage can be a strategic financial move for various reasons. Many individuals choose to refinance for home improvements, purchasing additional properties, funding post-secondary education, or consolidating debts to save money. If current interest rates are lower than when you initially secured your mortgage, or if you’re dealing with higher interest rate debt, refinancing can help regain control over your monthly payments while actively reducing your debt, not just the interest.
What is Mortgage Refinancing?
Refinancing involves taking out a new mortgage, paying off the existing mortgage, and borrowing against the equity in your home. The maximum amount you can borrow is typically 80% of the home’s current appraised value, minus any outstanding mortgage and penalties. There are associated costs, as the old mortgage must be discharged, and the new mortgage needs to be registered on the title. Some lenders offer in-house legal services to minimize these costs.
Debt Consolidation
Refinancing allows individuals to leverage their mortgage equity to pay off high-interest debts like credit cards or lines of credit. This can lead to improved monthly cash flow and, in many cases, a reduction in the overall mortgage repayment period. Consolidating bills can significantly decrease interest payments and overall financial burden. If you’re grappling with over-extended credit card and consumer debt, a consultation can help determine potential interest savings.
Disadvantages of Mortgage Refinancing
While refinancing can yield substantial savings, it may also incur costs. Prepayment penalties, often charged for breaking the mortgage terms, can be significant. Lenders might offer a ‘blended’ interest rate or work with you to absorb the penalty into the new mortgage loan. Additionally, closing a loan incurs associated costs that should be considered.
Our agents can help you assess whether breaking your mortgage to refinance and paying an early payout penalty will result in long-term savings. If it does, these penalties can be rolled into the new mortgage loan, minimizing out-of-pocket expenses.
Get In Touch
1330 Mid-Way Boulevard, Unit #1
Mississauga, ON L5T 2K3 Canada
(647) 525-4005
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info@apsmortgages.ca
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Mortgage Alliance - LIC # 10530