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, etc.Let us help you negotiate with your existing lender or switch to a new lender who will give you a more favourable rate. There are many factors to consider when refinancing your mortgage. Here’s a bit of 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 in advance of making an formal offers on additional properties. The limitations with some lenders that multiple properties entail 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 in advance, well in advance, of requiring it.If you plan is to potentially move from your 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 higher rate than your mortgage in order to compensate them for the higher risk of loss if you default. For many people it only makes sense to use available home equity to pay out this debt, as it typically reduces interest costs significantly. 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 want to spend a significant amount of money on improving your home, you may be able to take out a lot more equity than you realized! We can advise you through this process. All three insurers — AIG, Genworth and CMHC, will insure new mortgages which are “topped up” for this purpose, and the total of your current mortgage and the new funds exceeds 80% of the current home value. Not all improvements are eligible, however. Pools and spas are typical “over-improvements” which may not qualify for a high-ratio equity take-out. Of course, if the total requirement is less than 80% of your home’s current value, you should have little trouble getting the “top up” you need — regardless of the degree of luxury you plan to add.
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.
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