Comprehensive guide to refinancing your mortgage in Canada
There is a point in time when homeowners will need to refinance the mortgage on their house. The Canadian Mortgage and Housing Corporation (CMHC) states that mortgage refinance is a type of refinancing that give borrowers the opportunity to pay off the previous mortgage amount by securing another mortgage. The new loan comes with its own set of terms and interest rates which is different from the previous original loan. The borrower can take up to 80% of the appraised value of the property. Furthermore, the interest rates are lower when compared to other personal loans. There are various reasons for one to refinance a mortgage on their property, including several benefits. Below mentioned is a comprehensive guide to refinancing your mortgage in the country:
You must determine whether you need to refinance your mortgage
Applying for a long is a long-term commitment that shouldn’t be taken lightly. Before you decide to meet a lender, you must bear in mind the below-mentioned factors:
- Are you considering renovating your home?
- Do you plan on buying a new property?
- Will you have enough funds to put into your children’s education fund?
- Do you intend on starting a new business, but lack the funds for it?
- Will you need to consolidate all your debts through refinancing?
Assess and come to a conclusion to see if a mortgage refinance is the best alternative
Even though refinancing your mortgage offers low-interest rates, however, it only benefits the borrower under certain conditions. You must do thorough research on the property’s current value, including the current market rate in your region. If the current situation is favourable, then you should consider refinancing your mortgage. It can be difficult for one to reach the conclusion on their own. It is highly recommended for the borrower speak with a licensed mortgage professional like the ones from Matrix Mortgage Global to get a fair and transparent understanding of the market condition, and also get expert advice on whether refinancing is the correct option.
Determine if you will be able to pay off the monthly payments on a refinanced mortgage
Regardless of your decision to refinance the mortgage on your property, the amount you will need to borrow is solely based on the equity available in your house. Bear in mind, that while you continue to pay off your mortgage, the equity available in your property increases. The same also happens when the value of your property rises. Ask yourself the below-mentioned questions before applying for mortgage refinancing:
- How many funds do I need to borrow?
- How much money can I actually afford to borrow?
- Do I need the funds immediately? Or can I save up for it?
- How much money do I need to keep aside for the scheduled monthly repayments?
- If interest rates increase, will I be able to pay the loan off?
Be aware of your current credit score
Your credit score plays a vital role in whether you get your loan request approved or rejected. Based on your credit score, lenders will be able to determine if you are good at managing money and if you will be able to make the scheduled monthly repayments without any stress. Traditional lenders such as banks and credit unions usually do not acknowledge people who have poor credit scores, who are in debt or unemployed or who have filed for bankruptcy in the last couple of years. Private lenders on the other hand are lenient for those people whose income source is not consistent.
Survey all your mortgage refinance options
If you have a good credit score, it is time for you to gauge your mortgage refinancing options and find the best options that suit your specific requirements. Various mortgage lenders offer different interest rates and terms, you will need to take time to identify and understand which mortgage refinancing option suits your needs.
Work out what the total cost of savings will be for refinancing your mortgage
When you decide to refinance your mortgage, you are not only paying off the amount borrowed, but also other expenses such as:
- Title search fees
- Title insurance fees
- Legal costs
- Home appraisal costs
Once you have calculated all the expenses that come with mortgage refinancing, you will get a much better idea of when the loan option is favourable to you or not.
Submit your application and get your mortgage approved
After you have considered all your options, then comes the time to apply for a mortgage refinance on your home. If you are considering doing it by yourself, you may need to do your due diligence and approach several lenders and enquire about what documents will be required to be submitted along with your mortgage application. Many lenders will require you present proof of income and tax documents. If you have queries or need help going through all the terms and conditions, our team of experts can help you understand them before you apply. Be wary of the upfront fees, as loan agreements do not require them.
Schedule an appointment with Matrix Mortgage Global today
If you are still not sure about mortgage refinancing, then please do not hesitate to get in touch with the professionals at Matrix Mortgage Global to help and offer expert advice on why mortgage refinancing is the right option for you. In addition to offering top-class mortgage refinancing solutions, our insurance experts also have years of experience and knowledge to cater to any mortgage requirements that you may have. Whether you have a poor credit score, or you need a loan to purchase a home, we can identify the best mortgage refinance terms and rates. To find out more information or to request an estimate, please do not hesitate to reach out to our team today to schedule an appointment. Our team will be more than happy to address any queries that you may have.