Mortgage Renewals & Refinancing

When Should You Refinance Your Mortgage?

Here are some of the reasons why a homeowner may decide to refinance their existing mortgage:

• Mortgage refinancing to renovate a home: Home renovations can be expensive and home improvement store credit cards usually have high interest rates associated with them. By using the equity that you have available in a commercial property or from your home equity, you can pay for your home renovations at a much better rate than if you were to put all of your purchases on a store or personal credit card.

• Mortgage refinance to improve cashflow management: Sometimes we find ourselves encountering different types of challenges in life such as job loss, increased expenses, and other situations that put us in a position where our cashflow is low, restricting and difficult to balance. If you are a homeowner, then one of the quick and easy solutions that may be available to you can be refinancing your mortgage. You can use the additional cash to help temporarily alleviate some of your cashflow management issues while you are doing what’s necessary to improve your situation.If you own your house or property contact Fanson Mortgage to speak with one of our experienced and helpful mortgage brokers. We can help determine if you would qualify for a mortgage refinancing, how much you might qualify for, and which mortgage lender would offer you the best fixed or variable rates and terms.

• Mortgage refinancing to have money for a down payment to purchase another home or investment property: Many people want to, or consider to, invest into real estate. With the current high home prices in major Canadian cities, the down payment needed to purchase an investment property can be a limiting factor for most people living in Canada. There are more and more Canadians who are turning to refinancing their mortgages and using the extra funds as a down payment or deposit on buying additional homes, commercial properties, and investment and income properties.

• Mortgage refinance to invest: Aside from investing into properties, some homeowners choose to refinance their mortgages at a lower interest rate. These days, some homeowners are using these funds and investing the money into investment tools such as lending money for private mortgage investing, that yields much greater returns. This is called financial leveraging. This is what the banking industry is built on and what bankers have built their careers on. Financial leveraging is when someone is borrowing money at a lower interest to lend it out at a higher interest. The difference is their profit.

• Mortgage refinancing to pay for education or pay off student and education debt: With post-secondary education becoming more and more expensive, many homeowners are turning to mortgage refinancing as a way to pay for their child’s college or university education. Refinancing your home can also be a great solution to paying back higher rate student and education loans.

• Mortgage refinance to lower mortgage rates: Now, with today’s low rates, some Canadian property owners are refinancing their properties to get lower mortgage rates.As an example, let us say that you own a home and have an older first mortgage of $500,000 at an rate of 2% and a second mortgage of $200,000 at a rate of 8%. Your actual rate when taking into account both mortgages totalling $700,000 would be 2% multiplied by $500,000 plus 8% multiplied by $200,000 will give you $26,000. Divide 26,000 by 700,000 and that will leave you with a combined interest rate of 3.71% on $700,000.If you were able to refinance both mortgages into one single first mortgage with an interest rate of 3%, then you will end up saving a difference of 0.71% or $4,900 of interest over the course of one year.Depending on what your mortgage agreement specifies as the fee that you would pay as a penalty that you would have to pay for breaking your first mortgage early, the mortgage rates that you might qualify on the combination of your first and second mortgage can often times help you save a lot.