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What is mortgage refinance?
Mortgage refinance explained
If your current mortgage is coming to the end of its term you have a few choices and refinancing is one of them. A mortgage refinance is when you take out a mortgage for more than they currently owe on your mortgage. This gives you more access to the cash equity in your home. The mortgage amount is increased and the cash that is left over sent directly to you.
Mortgage refinancing is the process of entering a new mortgage term whether with the same bank/lender or with another. Mortgage refinancing consist of paying a penalty, if breaking a closed mortgage mid term. There is not penalty for refinancing a mortgage at the maturity date, as the exist mortgage term expires.
How to refinance your mortgage
How to refinance home
As earlier stated it is fairly often completed during your mortgage renewal but this is not always the case. Depending on your circumstances you may want to refinance sooner and pay a penalty. Our mortgage brokers are here to help you navigate these situations to find the best solution for you.
To refinance a mortgage, first, all home owners must complete a mortgage application and submit it to your mortgage broker, along with any other documents requested by the broker. Next, your broker will order an appraisal report confirming the property value, and other important details lenders require to validate for all mortgage refinancing.
The mortgage refinancing process is similar to the home purchase mortgage financing process, as traditional lenders will require to validate and qualify based on income and credit.
What are the benefits of refinancing my mortgage?
There are many benefits to mortgage refinancing. Homeowners can benefit from mortgage refinancing by:
- Paying down credit cards
- Have extra funds for home renovations
- Debt consolidation
- Purchase investments
- Debt to Revenue Canada
- New Business
- Pay for school
Unlike a HELOC Mortgage interest costs start from day one and are on the total amount of cash from the refinance amount.
Having bad credit does not mean a home owner cannot refinance their mortgage. To refinance a mortgage with bad credit, home owners are required to obtain financing from non-traditional methods such as private mortgage, second mortgage or home equity loan, where there are no income or credit requirements.