Mortgage Refinancing in Canada

To say this has been a “special year” might be a big understatement. The word “pivot” has come up many times over the course of 2020 as many families have been affected by market conditions and had no option but to get creative with their own financial pictures. For those that own property and have equity, the access to financing combined with all-time low interest rates has provided a fairly economical way to access funds. One popular strategy for accessing capital is known as Mortgage Refinancing.

What does Mortgage Refinancing mean?

This is an opportunity for a homeowner to renegotiate their current mortgage plan and refinance at a new rate or new terms. There could be several benefits such as lowering your current monthly mortgage payment or to access the built up equity from your home for the betterment of your personal finances or home improvement projects. Generally speaking, a homeowner can potentially access up to 80% of their home’s appraised value.

What are the benefits of Mortgage Refinancing?

• It’s time for a “Pivot” – a personal family event such as a wedding, post secondary education or a health matter may require quick funding.

• Lower Interest Rates – depending on when you activated your existing mortgage, the current low rates being at all time lows it is worth a discussion with your Mortgage Broker to build a comparison to outline potential savings over the remaining term.

• Debt Consolidation – you may have build up credit card debt and it is not being paid down as quickly as you had first planned. This could lead to extra financial stress and consolidating debts into a mortgage plan could not only save you stress but also time and money.

• Variable to Fixed Conversion – one thing we have heard is the pandemic of 2020 will surely affect future mortgage interest rates and may even present some opportunities to lock into fixed mortgage terms at great rates. Having a discussion with your Mortgage Broker to outline this switch could be a good opportunity for those seeking the security of a competitive mortgage payment that is ensured for a longer time frame.

Is Mortgage Refinancing Worth It?

This all depends on the applicant’s personal situation. Anytime a contract is broken in favour of a new one, there will be related costs or penalties as per the original agreement. In some cases, the applicant needs access to the funds much sooner for personal family matters and the cost to borrow from a mortgage lender could be lower than those of credit cards or alternative money lenders. Another thing to consider would be the overall savings once the mortgage has been refinanced. There may be some expenses at the time of the switch but looking ahead with a new lower monthly mortgage payment may actually save you over the course of time.

The above are just some highlights of mortgage financing and how this pivot could be a worthy consideration to ensure things run smoothly for you and your family matters. With all lending contracts, there are usually other expenses that you would want to include with the option to refinance. Feel free to connect with me anytime to setup a call to explore further.

All the best,

Sukh Sangha