Refinancing Your Home
Refinancing Your Mortgage
There are many reasons why you might consider refinancing your mortgage. Maybe you need some extra money for home renovations, a new car, investment or retirement. You might also be thinking about debt consolidation or taking advantage of lower rates.
By renegotiating your mortgage, you refinance your home to take out a portion of the equity you've built up. Equity is the difference between the value of your property and the amount of your outstanding mortgage. Your account manager can help you determine the equity in your home and how best to renegotiate your mortgage to free up your useable equity funds for your pet projects.
Keep in mind, there are penalties for paying off a mortgage early. As a general rule, it's good to get advice on whether any interest savings on a new mortgage will offset the penalties of paying off your current one.
More Equity, Faster
Many people refinance to shorten the term of a mortgage. Often, first-time buyers are appropriately cautious and take out a long-term mortgage to ensure they can meet the monthly payments. By refinancing to a shorter term at a higher monthly payment, you can end up saving tens of thousands of dollars in interest over the years. Furthermore, you build up equity in your home much more quickly and, should you need it, you'll have all that additional equity to borrow against.
Refinancing for Capital
Another good reason to refinance is to gain access to some additional cash. This is an especially good option if you have outstanding debts at an interest rate that is higher than your new mortgage rate. By using the additional cash to pay off your other debts, you're effectively amalgamating your debt under one roof at one low rate.
Reducing Monthly Payments
Perhaps the best reason to refinance is to take advantage of lower rates that will reduce your monthly payments. After figuring all of the refinancing fees and penalties into the cost of your new mortgage, you might well be able to reduce your monthly payment by a couple of hundred dollars. That extra cash can go a long way toward other major purchases, or can add significantly to your RRSPs or other investments.