Mortgage Refinancing

Top five reasons to refinance

In the heart of Canada, where homes dot the landscape as cherished assets, there exists a tale of growth and opportunity. Through the diligent journey of mortgage repayments and the grace of ascending property values, the equity within these homes flourishes. As this equity reaches a threshold of 20%, a path unfolds for homeowners—a path of refinancing, once straightforward and cost-efficient, offering a wellspring of funds. Yet, the narrative weaves in recent layers of mortgage regulations and stress-testing rituals, introducing twists and turns to the refinancing quest. Despite these challenges, for those deemed worthy, leveraging the equity of their dwelling continues to be a saga of financial wisdom.

Expert test matters

Tapping into the wealth stored in your home through refinancing is a smart financial move for many, offering a low-cost way to access needed funds despite newer regulatory complexities. For those who qualify, leveraging home equity continues to be a sound strategy in navigating personal finances.

YOUR GUIDE TO MORTGAGE REFINANCING

Mortgage refinancing involves replacing your existing mortgage with a new one, typically with different terms. This can mean securing a lower interest rate, changing the loan term, or switching from a fixed-rate to an adjustable-rate mortgage (or vice versa). Refinancing can also involve tapping into home equity for cash.

Consider refinancing when interest rates are lower than your current rate, when your credit score has improved significantly, or when you need to access home equity for large expenses. It's also wise to consider the break-even point—the time it takes for the savings to outweigh the costs.

Refinancing a mortgage comes with various costs, including but not limited to application fees, origination fees, appraisal fees, title insurance and search fees, and possibly prepayment penalties. It's important to calculate these costs to understand if refinancing is financially beneficial.

Yes, refinancing can affect your home equity. If you opt for a cash-out refinance, you're borrowing against your equity, which reduces the overall equity you have in your home. Conversely, if you secure a lower interest rate without withdrawing cash, you might build equity faster by reducing the interest portion of your monthly payments.

Qualification criteria for refinancing can include a certain level of home equity (typically at least 20%), a good credit score (the exact score can vary by lender), a stable income, and a low debt-to-income ratio. Lenders also consider your payment history on your existing mortgage.