If you want to refinance your mortgage or free up money for a big purchase, refinancing could help you reach your goal. Read on to find out if it's right for you.
GREAT REASONS TO REFINANCE
Get a lower rate
You can refinance your mortgage to take advantage of a lower interest rate. This can lower your monthly payments and make it easier to pay your mortgage off faster. This is one of the best reasons to refinance.
Revamp your mortgage
Your situation has probably changed a bit since you first got your mortgage. Why not get a mortgage that fits your life now? When you refinance, you can get a different mortgage term or get a different mortgage altogether. Here are a few examples of changes that could work in your favour:
If interest rates have dropped, shorten your mortgage term so you can reduce interest payments. Get a mortgage with more prepayment privileges so you use a recent windfall to pay off more of it. Change from a variable to a fixed rate mortgage if you want more predictability from your mortgage payments.
Access your home equity
Refinancing to use your home equity can help you access the funds you need to pay for things like a renovation, your kid's tuition, or even a loan to help maximize your investments.
Want an easier way to manage your debt payments? Refinance to merge debts into one payment with a lower interest rate. This is helpful if you're planning to stay in your home for more than a few years. Just take care that you're using those extra savings responsibly.
COSTS OF REFINANCING
Before you decide to refinance, it's important to understand the possible costs.
If you are refinancing before your mortgage term is up, there may be prepayment charges. To get a record of your home's estimated value, you'll need to pay a professional appraiser. You might have to pay discharge and legal fees.
DO I QUALIFY FOR REFINANCING?
To determine if you qualify for refinancing, your lender considers things like your income, debts, credit score and a calculation called the loan-to-value (LTV) ratio.
The LTV is the outstanding balance of your mortgage divided by your home's appraised value. Generally speaking, you qualify for refinancing if your LTV ratio is 80% or less. Example: A mortgage of $320,000 divided by a home appraised at $400,000 = 80% LTV.
YOUR MORTGAGE. YOUR WAY.
Thinking about refinancing your mortgage? Canada East Mortgages can help!