Are you unhappy with your current interest rate that you are paying on your mortgage? Or would you like to borrow from your home equity? These are both good reasons for a mortgage refinance!
Simply put, a mortgage refinance is when you break your current mortgage and replace it with another one. Your new mortgage may be for the same amount as your old one – in which case the new mortgage simply pays off the old mortgage and you start making payments on the new mortgage.
Or if you’d like to borrow from your home equity – then your new mortgage is for a higher amount than your old mortgage. The new mortgage pays off the old mortgage and any amount above that is paid out to you in a lump sum of cash. Most lenders will allow you to borrow up to 80% of your home equity, so the amount of cash that you can borrow with a mortgage refinance can be quite substantial.
A mortgage refinance usually has a lower interest rate than other options like a second mortgage, however it is important to remember that there will be a financial penalty for breaking your first mortgage. Overall, however, this may still be a better option for you and your mortgage broker can run the appropriate calculations to determine whether a mortgage refinance or a second mortgage will ultimately be the more affordable option for you.
Canadians choose to refinance their mortgages for a number of reasons. Among the most common reasons for a mortgage refinance are:
In order to get the best possible rates on a mortgage refinance, it is important to compare the rates of various lenders. By working with a qualified mortgage broker, you’ve got a professional on your team that can do this for you.
Brokers have a wide network of reputable lenders that they work with. In fact, there are some lenders that may only be accessed through a professional mortgage broker.
Additionally, it is important when you are applying for a mortgage refinance not to do anything that may damage your credit. Ensure that you are paying all of your bills in full and on time and don’t take out any other large loans during the application process as this could affect your credit and possibly impact the rate you’ll have to pay on your mortgage refinance.
Even if you have bad credit, it is still possible to get approved for a mortgage refinance. As mentioned, your mortgage broker has access to a large network of lenders – and some of these lenders actually specialize in helping people with poor credit. Just be honest about your financial situation with your broker and let them do the rest.
Did you know that you can even use a mortgage refinance to help repair your credit? When you choose a mortgage refinance for the purpose of debt consolidation, you can lower your overall interest which can help you to get out of debt more quickly. As long as you are able to make your regular payments on your mortgage refinance – and don’t get yourself into further financial trouble – you’ll be repairing your credit.
Although you may be able to go to your bank or current mortgage lender to get a mortgage refinance, it is usually much better to do this with the help of a professional mortgage broker. There are a number of advantages to working with a mortgage broker to get your mortgage refinance including:
If you think that a mortgage refinance might be the right choice for you, I would be happy to help. Contact me today to arrange for a consultation.