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Mortgage refinancing can be a wise financial decision for Canadian homeowners looking to reduce the cost of their monthly mortgage payments, shorten their loan term, or simply access the equity they have already built in their homes.

However, mortgage refinancing may not always be the best answer for every homeowner, and there are a number of factors to consider before deciding to go this route.

In this article, we will explore several do’s and don’ts of mortgage refinancing so that you can maximize your cost savings while avoiding common mistakes that borrowers often make.

Mortgage Refinancing Do’s and Don’ts

DO:

Put your best foot forward as a borrower candidate.

As lenders are more cautious today than ever when it comes to making deals with borrowers, you will need to have proof of steady income and employment ready to show your prospective lender. If you happen to be unemployed at the time of your mortgage refinancing application, put together any evidence you have that can demonstrate a history of consistent income prior to your unemployment.

Moreover, you should also make sure that you have a strong credit score before proceeding with your mortgage refinance. Fortunately, there are several ways you can help to strengthen your score before starting your mortgage refinancing process, if necessary.

Shop around to find the best deal possible.

When finding a lender for your mortgage refinance, don’t simply pick the first one you stumble upon that seems like the right fit. It’s important to explore all of your options until you know that you’re going with the lender and agreement that suits you best and is capable of saving you the most money possible.

Know what your closing costs will be.

It’s important to always be in the know about what your closing costs will be. This is because the refinancing process will include certain fees, many of which may actually end up costing you more money, thus going against your goals.

These additional costs include registration fees, legal fees, and prepayment penalties, which can be the heftiest of all (but will only be applied in the case of breaking a term too early or having too many months remaining on either a fixed-rate or closed mortgage).

Have all of your necessary documents ready.

It’s important to have all of your appropriate documentation gathered and ready to present when applying for mortgage refinancing, as there will be no time to waste, and you’ll want to lock in your rate as promptly as possible.

These documents include your credit score, a recent mortgage statement provided by your lender, proof of employment via pay stubs, bank statements and/or a letter of employment, proof of income via tax documents, an estimate of your property’s current value, as well as a recent copy of your property tax statement or Final Property Tax Bill.

DON’T:

Refinance at an inopportune time.

Homeowners should only refinance the mortgage of their property when it is financially beneficial to do so or when more savings are guaranteed in the long run. Additionally, it is not advised to refinance if you are working with less than 20% in home equity at the time of consideration.

Fail to perform a background check on your lender.

Unfortunately, some lenders will offer very low and attractive rates, only to have a hidden agenda to take advantage of you. This is why it is crucial to perform a background check on your prospective lender and lending institution before going through with a deal, in addition to performing a thorough evaluation of the terms of the mortgage you are being offered (never overlook the fine print).

Fail to lock in your interest rate immediately.

In the world of mortgages, interest rates are constantly fluctuating, with the potential to be low one day and high the next. That’s why we strongly advise borrowers to lock in their mortgage refinance rate as soon as possible, as it will then no longer be at risk for a changing (and potentially higher) rate while their loan application is being processed.

Neglect to thoroughly read and understand your refinancing agreement’s terms.

Never rush reading through each legal document pertaining to your mortgage refinancing application and agreement. Again, always pay careful attention to the fine print and the clauses outlining critical details, including the mortgage term and interest rate, amortization period, options for prepayment, penalties, and others. Moreover, if you’re unsure about anything in the terms, ask your lender or broker about it.

In conclusion, mortgage refinancing can be a very valuable option for Canadian homeowners looking to improve their financial situation. By doing the necessary research and following the aforementioned do’s and don’ts of mortgage financing, you can make informed decisions while dodging common mistakes that can be quite easy to make.

Interested in refinancing your mortgage?

Our mortgage lenders in Ontario are here to lend a hand. Canadalend.com can provide you with the financing best suited to your needs, whether it be mortgage refinancing in Ontario, a home equity loan, a second mortgage, or a reverse mortgage.

To learn more about our mortgage refinancing solutions and financing options, call Canadalend.com at 1-866-I CAN LEND or contact us here.

Without a doubt, purchasing a home is one of the greatest financial investments that anyone can make in their lifetime. This is why choosing the most suitable mortgage is critical to every new Canadian homeowner’s buying journey.

Cash back mortgages, in particular, have become a progressively popular choice for borrowers who require extra funds to cover certain expenses, such as costs related to moving, closing costs, and other common fees associated with home buying.

However, it’s important to understand that this mortgage solution may not be the right move for every homebuyer, and you should first determine (ideally with the help of a professional) whether you are a suitable candidate for a cash back mortgage before making any major decisions.

With that being said, in this article, we will be helping new homebuyers understand what a cash back mortgage is and the types of homebuyers they are most appropriate for.

What is a cash back mortgage?

A cash back mortgage allows borrowers to obtain a certain amount of money back from their lender during the finalization of their mortgage loan. The borrower will typically receive the cash back funds instantly upon the mortgage closing date.

Cash back mortgages are most commonly used to cover closing costs and other charges, purchase furniture and appliances, helping to fund renovations and upgrades or cover the costs of general unanticipated expenses that follow the purchase of a home. 

Additionally, cash back mortgages are often used to pay off the debts created by high interest, such as with a credit card or other type of personal loan.

How much money am I eligible to receive with a cash back mortgage?

When it comes to the amount that borrowers are eligible to receive with a cash back mortgage, it will depend on the size of the loan, with a lump sum of generally 1%-7% offered (with 5% being the most common).

For example, let’s say you’ve been approved for a $500,000 mortgage, and you’ve arranged to receive 5% cash back. Upon your mortgage closing, you will receive a lump sum of $25,000, with a mortgage balance of $525,000, even though only $500,000 is technically registered as your mortgage. The $25,000 is registered as a loan.

Furthermore, there may be a maximum amount that you are eligible to receive as per the lender’s rules. The funds will always be tax-free, although the mortgage interest rate will generally be around 1.75% higher than a conventional mortgage. Additionally, if the mortgage is broken early, you will be required to return some of the cash back amount.

As soon as a borrower’s mortgage has been finalized and they receive their cash back funds, they’ll be required to start making mortgage payments. The cash back value will be included in the mortgage payment balance, with each payment automatically contributing to its amortization for 25 years.

Who is a suitable candidate for a cash back mortgage?

A cash back mortgage can be a suitable option for many types of borrowers, from first- to second-time homebuyers to borrowers who are interested in refinancing their current mortgage.

While it is true that a cash back mortgage may be an excellent option for some, unfortunately, like with all types of loans, not everyone can qualify for it. In fact, a potential borrower will only be considered as an eligible candidate for a cash back mortgage if they possess a minimum credit score of 650, have a low debt-to-income ratio, have a stable income, and are applying for the cash back home loan as an owner-occupier (never as a renter).

At the end of the day, a cash back mortgage can be a considerably attractive option for many homebuyers in Canada, especially if they could use some extra funds to help with the associated costs. However, as always, it is important to do your research and seek help from a professional before making any official decisions about any mortgage option.

The good news is that our mortgage experts at Canadalend.com would be pleased to consult with you to determine whether a cash back mortgage is the right choice or if another kind of mortgage would be more beneficial for your financial situation.

Ready to purchase your home with a cash back mortgage?

Our mortgage lenders in Ontario are ready to lend a hand. Canadalend.com can provide you with the financing that’s best suited to your needs, whether it be a cash back loan, refinancing, a home equity loan, a second mortgage, or a reverse mortgage.

If you’re interested in purchasing a home in Ontario and want to learn more about our mortgage solutions and financing options, call Canadalend.com at 1-866-I CAN LEND or contact us here.

As you may know, a second mortgage is a loan that uses a homeowner's property as collateral, similar to their primary mortgage. Just like with primary mortgages, a homeowner can choose to refinance their second mortgage and replace their current second mortgage with a new one, ideally containing better terms and lower interest rates. 

However, there are certain situations or circumstances where it would make the most sense for a borrower to refinance their second mortgage. In this article, our mortgage experts will detail when and why you should consider refinancing your second mortgage in Ontario. 

When it's wise to refinance a second mortgage 

As a Canadian homeowner, you likely have specific financial goals you want to obtain in the future. 

That said, if your financial situation has recently changed to allow for a refinance of your second mortgage, there are several specific advantages this option can offer you to help you manage your debt and improve your overall financial situation in the long run. 

These second mortgage refinancing benefits include: 

Lowering Your Interest Rate and Paying Less per Month

Perhaps you had poor credit history or something else standing in the way of obtaining a low-interest rate when you initially applied for your second mortgage. 

If your situation has improved and you can get a lower interest rate on your new second mortgage, this can help save you money in the long term. This is especially true of a fixed-rate mortgage. 

Obtaining Better Loan Terms

Refinancing your second mortgage can also give you access to more fiscally beneficial loan terms to suit your financial needs, such as a shorter or longer repayment period or, as aforementioned, a fixed interest rate which can provide you with more security regarding your future payments. 

Consolidating Debt

If you are currently dealing with other obligations containing high-interest rates, such as personal loans or credit cards, you can reduce them into a refinance of your second mortgage. 

Cashing out some of the equity in your home: You can choose to use a cash-out refinance on your second mortgage if you are in a situation where you need extra money for things such as home renovations or repairs, education fees, medical bills, and other potential expenses. 

Improving Your Credit Score

Refinancing a second mortgage can also help homeowners to improve their credit score, such as by securing better loan terms that enable them to make timely payments on their new loan (a habit that does not go unnoticed when it comes to improving credit).

Are you considering refinancing your second mortgage? Keep these things in mind.

No matter the reason or reasons you may be motivated to refinance your second mortgage, there are some essential factors that you'll need to take into account before officially choosing this option. 

Firstly, consider how long you plan to stay at your home, as a second mortgage refinance will not make much sense if you're considering selling soon. Ideally, you should only consider refinancing your second mortgage if you will likely still live at your house for the next 5 to 10 years. 

Secondly, you'll also need to determine the closing costs of your second mortgage since a second mortgage refinance will not be beneficial if the closing costs or other associated refinancing fees are greater than the savings you want to achieve. 

Last but certainly not least, you'll want to be as confident as can be when choosing your second mortgage refinance lender. Make it a priority to find a lender that can provide you with the best loan terms, and pay close attention to the interest rate and processing and closing costs. 

With all of that said, it's essential that you weigh the pros and cons of refinancing before making an official decision to refinance your second mortgage. Consider your current financial situation, long-term financial goals, and plans before taking the plunge (or speak to one of our mortgage lending experts at Canadalend). 

Take Advantage of Second Mortgage Refinancing Starting Today

Fortunately, finding the right lender when refinancing your second mortgage in Ontario can be easy when you choose from our team of experienced and personable private lenders. We at Canadalend.com can provide you with an optimized mortgage solution that is smart and beneficial to your specific circumstances, so you can start breathing a little easier.

To learn more about our mortgage refinancing solutions and financing options, call Canadalend.com at 1-866-I CAN LEND or contact us here.

Applying for a mortgage can be quite an overwhelming, time-consuming, and even frightening process, particularly for first-time home buyers.

Considering all that is involved in the application process, such as gathering important documents and paperwork, meeting regularly with potential lenders, and everything else in between, it can be easy to slip up and make mistakes that may potentially hinder your chances of getting approved. Such errors can even cost you considerably more than is necessary in the long run.

With that being said, being aware of the common mistakes that are easy to make during a mortgage application can help you better navigate this complex process with more confidence and ease. Such knowledge can also boost your chances of obtaining the most attractive mortgage rates and terms available to you and your family.

In this article, we will uncover five of the most common mortgage application mistakes that homeowners-to-be tend to make. Additionally, we will provide tips on how you can avoid making these errors, too.

Mistake Number One: Dodging the Pre-approval Letter

As a homeowner-to-be, you will want to ensure that you secure a mortgage pre-approval letter prior to beginning your mortgage application process. This pre-approval form will grant you the opportunity to discover just how much money you can get approved for, which will allow you to focus only on the homes you can truly afford during your search. In addition to this, it can also play a role in helping to speed up the process during your final mortgage approval.

Moreover, receiving a pre-approval letter before starting your mortgage application process will give you an advantage over other buyers, as sellers will view you as a more qualified and competent buyer than others without a pre-approval letter to present.

Mistake Number Two: Being in the Dark About Your Down Payment Options

It is essential to know about your various down payment options prior to applying for a mortgage for several different reasons. These reasons include that it will help you determine affordability, allow you to budget for additional expenses, and ensure that you can meet the requirements set into place by your lender (thus increasing your chance of approval).

Lastly, it will also help you identify another way you can save money over your mortgage loan.

Mistake Number Three: Failing to Have All of Your Documents Ready (and Not Ensuring That All Information Is Accurate)

Your lender will require a lot of information from you to determine whether you are eligible for an approved mortgage. Therefore, you should be as cooperative as possible and have all the correct paperwork and documents ready for presentation, which should all be accurate, detailed, legible, and fully complete.

Without all of this necessary paperwork filled to completion, a reputable lender will not be able to successfully process your mortgage loan, or at least process it in a timely manner, as they will be waiting on you to finally provide all the information that they need.

Moreover, including any errors in these documents may also harm your chances of receiving a mortgage approval, as false or misleading information (or withholding certain details) can be considered fraudulent.

Mistake Number Four: Failing to Check Your Credit Score Beforehand

As you are likely already aware, your credit score is a critical component of the mortgage approval process. In order to ensure that the odds are in your favour for an approval, in addition to securing a low interest rate, you will need to ensure that your credit score is above the minimum number required (and ideally on the higher side).

If your credit score could use some improvement, then it is best to put off your mortgage application until you can boost it up to a more attractive score.

Mistake Number Five: Neglecting to Read the Fine Print

Reading the fine print while applying for a mortgage is the best way to ensure that you have a complete understanding of the loan’s terms and conditions (including the interest rate, fees, and repayment period). Make sure that your lender is trustworthy, has a good reputation and allows you to avoid potentially costly hidden fees or charges.

Moreover, it is critical that you read the fine print to become fully aware of your exclusive rights and responsibilities as a borrower, as knowing this information will help you to steer clear of any possible future financial or legal troubles.

Let Our Team of Experts at Canadalend Help You Obtain the Right Mortgage in Toronto and Beyond

When you choose an expert from our team of experienced and reputable private lenders in Ontario, you can rest assured that we will be with you every step of the way in securing the right mortgage for you.

To learn more about our private mortgage solutions in Toronto, as well as our financing options, call Canadalend.com at 1-866-I CAN LEND, or you can contact us here.