In simple terms, refinancing your mortgage is nothing but taking a new mortgage on your existing property. This new mortgage will close the current mortgage payment and start a new one afresh. Some of the critical options associated with refinancing are interest rates, term period, monthly payment structure, and loan amount. The interest rate can either be flexible or fixed, depending on the lender and the financial situation and affordability of the individual.
The first step involved in refinancing the mortgage is determining the value of your home. The lender or expert should evaluate the home's current market value you are planning the refinancing. In most cases, the refinanced mortgage amount would be 80% of the property's market value. This particular sanctioned amount minus the existing mortgage repayment would be the resulting amount of the refinanced mortgage. The property owner can then use the equity amount left after this calculation for renovation purposes or even clearing out other debts.
To refinance your mortgage, you need to follow specific steps without fail, and those are the ones we are going to discuss in this section. All the particulars discussed below are for the mortgage re-financing rules and regulations framed by the concerned authorities in Canada. For better understanding, make sure to read through every single one of these procedures.
Data collection - You need to possess data on all the financial activities performed in the financial year and the years before. Data corresponding to the current property value, current mortgage amount, annual income, credit score, etc., is also mandatory. Here is a list of different variables.
Mortgage re-financing is an excellent solution for lowering debts, lowering interest rates, and is a treat for property owners looking to renovate their homes. A line of credit might be a better option for some users when compared to refinancing. Refinancing is a better option for sure, but that doesn't make it the best pick for every property owner in Canada. Careful analysis of the market rate, term, trends, and current property value plays a crucial role in deciding whether the mortgage re-financing is good or bad for the borrower.
This page should not be taken as advice, please email or call in to the licensed mortgage brokerage and make and an appointment before making any decisions.