Refinancing Your Mortgage
There are many options available to consider when you are refinancing your mortgage. Dependent on the purpose, we can structure the right mortgage for your particular situation. Here are a few reasons to refinance:
- Debt Consolidation - Replacing high interest debt ie. credit cards and unsecured lines of credit with a mortgage at a much lower rate not only saves you a great deal of interest but also reduces the amount that you pay out to debt on a monthly basis. It is always great to have more money in your pocket per month. Let me show you how.
- Investment - Whether you are refinancing for investments in stocks, bonds or other investments vehicles or you are using the equity in your current home to buy another property for rental purposes – this is a smart way to finance what you need to grow your net worth. In many cases the interest costs can be tax deductible for these types of investments but please contact a Chartered Accountant for an exact explanation of how much can be deducted in your particular situation.
- Switching from a higher rate to a current lower rate – Let’s say you have a 5 year fixed rate mortgage that you took out in 2006 for a rate of 5.7% and current rates are in the low 4% range (with some variable rates at even 2.10%!). There may be an opportunity to refinance to take advantage of the current lower rate, reduce your payments and extend your maturity out at that lower rate. There is usually a penalty involved and it depends on many variables – but most times, if you have a few years remaining on your current mortgage then it would make sense to pay the penalty. You can roll this penalty cost into the refinance so you are not out of pocket up front. With the lower rate you will be able to recapture that cost fairly quickly in the new mortgage. Let me give you a estimate on the penalty and also the recapture time – I will tell you if it is worth breaking your current mortgage.
- Renovations - Are you tired of your kitchen, bathroom? Need a new roof, want to convert your home to a Eco energy saving sanctuary or simply want to spruce up what is already there or build an extension – a refinance is the perfect solution. Again, there are many products and solutions that are geared towards renovation refinances. Let me guide you through the process.