Refinancing a Mortgage in Canada
Refinancing is the process that pays the existing mortgage and/or any other legal claims against the property and sets-up a completely new mortgage(s). There are many reasons as to why you should consider refinancing your mortgage. We can provide you with the technical expertise you need to refinance your Canadian mortgage successfully.
Mortgage Management – Refinance No Balance Change
Whether or not you should change your current mortgage depends on several factors. If the current rates are lower or new mortgages have been introduced from when you obtained your mortgage then it pays to compare the total costs to the total savings of changing your mortgage. We have a comprehensive calculation and review process to help you make the best decision possible.
It is our recommendation that you review your mortgage at least once a year – an annual review. Every year Canadians needlessly spend thousands of dollars on their mortgages that could otherwise be saved. Don’t let savings on your mortgage go to the lender’s shareholders – our mortgage management program gives you the peace of mind to know that you are building value for the most important shareholder of all – you!
Financing to Buy Investments
You can put the equity in your home to work and finance the purchase of investments and/or do a debt swap to transfer non tax deductible debt to become tax deductible. If done properly you can not only benefit from the lower carrying costs, but also make all (or a portion of your interest tax deductible). For high income earners this can cut the after tax cost of interest nearly in half!
Financing the Purchase of an Investment Property
If you have home equity and are interested in further real estate investing, you could take equity out of your current property by refinancing the mortgage and using the increase as the down payment for the purchase of an investment property. This may also allow for additional interest deductibility that could be missed by usinng current savings instead.
The best thing we can do for our children is be good role models to them, teach them to be responsible citizens, and give them as strong a foundation possible, and in many cases this includes helping them obtain a good education. With the much higher tuition costs of many schools and programs today, many have not set aside enough to adequately assist in the financial burden of schooling. Home equity may be the cheapest way to bridge the gap.
Financing a Renovation
If you are doing major renovations (spending over $15,000), it could be less painful monthly with a mortgage as opposed to a loan or line of credit. Your current mortgage may also no longer be the most suitable or competitive in today’s market.
If your monthly bills have gotten out of control, you might be able to refinance your home and pay them off. The advantage of doing this is to lower your total monthly payments. You should have a mortgage specialist review your situation and make a recommendation.
Refinance Two Mortgages With One Mortgage
If you have two mortgages on the same property such as a mortgage and a secured credit line, you can combine them into a new first mortgage providing the total amount does not exceed 90% of the property’s value. If the new mortgage is over 80% of the property value, normal hi-ratio insurance (CMHC/GE Capital premiums) and guidelines apply. This can streamline cash flow and/or access funds from the equity for personal use or investing.
Costs Related to Refinancing
You should review your mortgage on a regular basis and keep up with new products and offers that are available – there may be hundreds of dollars in monthly cash flow you are missing. When you break a closed mortgage contract to obtain a new mortgage, you are generally faced with a prepayment cost by the financial institution. Typically, this prepayment charge is based on the greater amount of either 3 months’ interest or the interest rate differential (IRD). We would not only be happy to help you calculate this, but also happy to show you ways to minimize this cost.