According to the Financial Consumer Agency of Canada, you can do mortgage refinance through breaking your current mortgage and getting a second loan that you secure with your home equity, by accessing your home’s equity through a home equity line of credit (HELOC), or by extending or blending your mortgage with your current lender, or through reverse mortgage (for those over the age of 55).
Lower interest rates: Breaking your current mortgage contract for one with a lower interest rate can save you money over time. At Approved Mortgage Broker, we will consider the penalties you will incur for breaking your current mortgage and help you do the math to determine if you will save money at the end of the day. Note you will pay a 3-month interest penalty for a variable rate mortgage and IRD (interest rate differential penalty) for a fixed-rate mortgage. Access to equity in your home: Mortgage refinance allows you to access up to 80% of the value of your home less outstanding mortgages. You can use the extra money for home renovations, investment opportunities, emergencies, education, and other uses. Debt consolidation: Having enough equity in your home combined with paying off high-interest debt through refinance will help improve your credit score. There are refinance options that allow you to combine different outstanding debts such as lines of credit, credit card bills, and car loans. If you are stuck with a variable rate mortgage and you prefer a fixed-rate mortgage or vice versa, or if you want to lower your monthly repayments, mortgage refinance is the best option. We also consider the additional fees that you will incur. Whatever the refinance option you go for, you will incur legal costs since a lawyer is needed to change the financing of the title. Another common fee is bank fees to facilitate the paperwork. We will assist you to avoid or counteract these fees by shopping around for free refinance or low bank fees. Other applicable fees are home appraisal fees, title insurance fees, and title search fees.