I want to refinance my mortgage
When you break your existing mortgage to start a new one, you can choose to refinance with the same lender or transfer to a new one. Some of the reasons you would want to break your existing mortgage might include: to get a lower interest rate, consolidate your finances, or access the equity in your home to cover a large expense.LEARN MORE
My mortgage is coming up
When your mortgage term comes to an end, you have the option of paying off your mortgage in full or renewing it. Your current lender will notify you when it is time to renew. By law, they are required to send you a mortgage renewal statement at least 21 days before your term is up.LEARN MORE
I want a home equity line of credit (HELOC)
A home equity line of credit or HELOC is a loan that is secured against the equity in your home. It differs from other types of loans in that you are not given an entire sum of money up front. You borrow the amount you need (up to the limit established by your lender), when you need it.LEARN MORE
What is mortgage refinancing?
Mortgage refinancing is when you break your existing mortgage to start a new one. You can choose to refinance with the same lender or transfer to a new one. Some of the reasons you would want to break your existing mortgage might include: to get a lower interest rate, consolidate your finances, or access the equity in your home to cover a large expense
When is it a good idea to refinance?
If you are looking to reduce your monthly mortgage payments, save money by lower your interest rate or shorten the term of your mortgage, or consolidate your debt by tapping into your home’s equity, refinancing your mortgage can help you achieve your goals. However, there are costs associated with refinancing so it’s important to determine if refinancing will be a wise financial decision for you.
Refinancing to take advantage of lower interest rates
A lower interest rate may be one of the best reasons to refinance. It not only helps you save money in the long-run, it also increases the rate at which you pay down your mortgage, and can decrease the size of your monthly payments.
Refinancing to tap into the equity in your home
When you need to pay for large expenses like home renovations or education it makes sense to replace high-interest debt such as credit cards or other loans, with a low-interest mortgage.
When is it not a good idea to refinance?
Before you make the decision to refinance your mortgage, you’ll need to examine all the costs and potential risks involved to ensure that your refinance does not end up costing you more than you are saving.
Mortgage refinance costs
There are a number of fees and closing costs associated with a mortgage refinance such as prepayment charges for ending your mortgage agreement before the term is done, property registration and valuation, and lawyer fees.
Mortgage refinance risks
If you are switching to a variable-rate from a fixed-rate, you run the risk of having higher monthly payments if there is an increase in interest rates. This is what happened during the recession of 2007 when a sudden sharp increase in mortgage rates caused many people to default on their mortgage because they couldn’t afford to pay the higher monthly payments.
If think you will have to move soon because you have outgrown your home or have to relocate because of a job, refinancing isn’t for you. If you move within a few years of refinancing, the savings likely won’t outweigh the closing costs.
If you can justify the costs and risks involved with the money you will save with your new mortgage rate, then breaking your mortgage makes sense. It’s not a good idea to refinance your mortgage if it is unrealistic for you to assume the financial risk.
Are ready to start your mortgage renewal process today? Speak to one of our mortgage specialists today.
What is mortgage renewal?
When your mortgage term comes to an end, you’ll have to either pay off your mortgage in full or renew it. Your current lender will notify you when it is time to renew. By law, they are required to send you a mortgage renewal statement at least 21 days before your term is up.
This is an opportunity for you to renegotiate the terms of your mortgage agreement, such as the interest rate and length of term, with your current lender or consider transferring your mortgage to a new lender.
Why should you consider transferring your mortgage?
Transferring your mortgage to another provider will give you access to better mortgage rates and terms. If your income has increased since you started your mortgage, you may be looking to pay off your mortgage sooner and save yourself years of interest payments. Lenders differ in their payment options so you may be able to find one that better suits your needs.
Start your research early! Find out what other lenders are offering in terms of mortgage rates, prepayment options, and other terms and conditions, and you’ll be in a better position to negotiate when you are ready to renew.
Speak to one of our mortgage specialists to find the best mortgage rates and terms for you.
What is a home equity line of credit (HELOC)?
A home equity line of credit or HELOC is a loan that is secured against the equity in your home. It differs from other types of loans in that you are not given an entire sum of money up front. You borrow the amount you need (up to the limit established by your lender), when you need it. The amount of time you have to borrow funds (draw period) can range from 5 to 25 years. You can make a repayment of any amount, at any time. Your minimum required monthly payment is if often the interest only. The full amount of the funds you have borrowed, plus outstanding interest, is due at the end of your draw period.
Why should you consider a home equity line of credit?
A home equity line of credit works a lot like a credit card account. It allows you easy access and flexibility in the amount you need to borrow (up to your limit). Because it is secured by the equity you have in your home, the interest rates are lower than credit cards or other types of unsecured loans.
Homeowners commonly use a home equity line of credit for:
- Debt consolidation
- Home improvements
- Emergency expenses
- Business expenses
What are the advantages of a home equity line of credit?
A home equity line of credit allows you easy access to available credit. It is flexible and can be set up to fit your borrowing needs, and it’s a good way to consolidate your debts at a lower interest rate.
Other advantages include:
- You can borrow as much as you want up to your available credit limit.
- You only pay interest on the amount you borrow.
- You can pay back the money you borrow at any time without a prepayment penalty.
- Interest rates are often lower than other types of credit, such as unsecured loans and credit cards.
What are the disadvantages of a home equity line of credit?
There are disadvantages to a home equity line of credit that are common to other loans, such as:
- Changing variable interest rates that could increase your monthly payments.
- Your lender can reduce your credit limit.
- Your lender has the right to demand the full amount at any time.
- Your credit score will decrease if you don’t make the minimum payments.
Other disadvantages include:
- Easy access to large amounts of available credit makes it easier to spend higher amounts, which can lead to carrying a larger debt for a longer amount of time.
- If you switch your mortgage to another lender you may have to pay off your full home equity line of credit and any credit products you have with it.
- Your lender can take possession of your home if you miss payments.
Before you get your home equity line credit, you should consider things like flexibility, fees, interest rates and terms and conditions.
Contact one of our mortgage specialists to find a home equity line of credit that suits your needs.