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:
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Mortgage Alliance Company
Of Canada Inc. – License# 10530
An Independently Owned & Operated
Corporate office address: 200-2005 Sheppard Avenue E, Toronto, ON, M2J 5B4