There are a lot of rules when it comes to refinancing. Some say it’s only worthwhile when the interest rate drops at least two percentage points. Others suggest that most are likely to get better terms simply by refinancing. For most Canadians, refinancing can be beneficial. At the very least, it is a good option to explore.
There are different ways to refinance your loan. If this is your preferred route, then you need to decide which option will work best for your situation.
As housing prices soar, many borrowers want to take advantage by refinancing their mortgage. The refinancing options can include combining first and second mortgages, debt consolidation or negotiating a new loan altogether. You could also attempt to break your mortgage in the hope of refinancing. Some borrowers do this to get a loan with terms that are more suited to their financial situation. This is a common method if someone experiences a change in their life such as losing a job or starting a new business.
Speak to your lender to get an idea of what’s best for your financial situation. Also, it doesn’t hurt to meet with a few different lenders to get an idea of what a refinanced loan could look like.
Refinancing offers borrowers a new mortgage with new terms. It replaces the old loan and the goal is to receive more favourable terms with respect to interest rate, monthly payment or the timeframe of the loan.
It doesn’t make sense to refinance unless you get something beneficial out of the arrangement. Ideally, you walk away with a lower interest rate or monthly payment. Refinancing can improve your cash flow, which can help pay for renovations, post-secondary education, medical expenses or travel. You could also negotiate to pay off the loan in a shorter amount of time. This will help you build equity faster.
The first step towards refinancing is to learn more. Contact us today to speak about your refinancing options. We’re equipped to answer your questions and guide you towards a decision that will offer you the most benefits.