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How Does Refinancing Work?

What happens when you refinance your mortgage? When you refinance a mortgage, you pay off the existing mortgage and replace it with a new one. Usually with better terms and mortgage rates; especially when compared to other types of unsecured credit.

If you’ve paid down a significant portion of your existing mortgage, refinancing can be used to not just pay off the original mortgage, it can also be used to make other purchases or pay off other debts as well.

Mortgage refinancing can be used as a form of debt consolidation. It can also be used for home renovations, travel, investing, buying additional property, or helping pay for tuition. Anything you want.

If you have a mortgage and are thinking of refinancing, you do not have to use your current lender. There are a lot of private lenders out there that can provide better terms and rates than Canada’s big banks.

Benefits of Refinancing Your Mortgage in Cambridge

There are a lot of good reasons why you should consider refinancing your home or property in Cambridge.

Lower Interest Rates and Payments

If interest rates on a new loan are lower than the original mortgage, you can save a lot of money over the life of the mortgage. It will also mean lower monthly payments. Refinancing a mortgage with a lower interest rate in Cambridge, even just half a percentage point, can add up. A monthly savings of $150 or more can have a big impact on a family’s budget.

Access Equity in Your Home

Refinancing a mortgage to access the equity built up in a property is one of the most popular reasons to refinance. Whenever you make a mortgage payment you build up equity. The more you pay off the more equity you have. If the value of the property has also gone up, chances are you’ve built up more equity in your house than you think.

When you refinance a mortgage, you can take out the equity in your home and add it to the current loan balance. Again, you can use that extra money to pay down higher interest debt, or use it to make purchases or investments. It’s your money, you can use it any way you like.

Shorten or Lengthen the Term of Your Loan

Have your finances changed since you first got your mortgage? If so, you might want to lengthen or shorten the amortization period, or length of time it takes to pay off the mortgage.

If your financial situation has improved, it might make sense to refinance a mortgage with a shorter amortization period. Paying more each month will lower the amortization period by five or more years, saving you tens of thousands of dollars in interest payments.

If funds are a little tight right now, refinancing a mortgage with a longer amortization period might be a good idea. Refinancing will free up some equity you’ve built up in your property. It will take longer to pay off the mortgage, but it could mean freeing up an extra $200, $300, or more every month.

Refinance to a Fixed-Rate or Adjustable-Rate Mortgage

When you refinance a mortgage, you can also switch to a fixed-rate or adjustable-rate mortgage. If you have an adjustable-rate mortgage and think rates are going to go higher, it might make sense to lock into a fixed-rate loan. Securing a low, fixed-rate loan will protect you from rising interest rates. A fixed-mortgage rate also makes it easier to plan your monthly budget.

If, however, you already have a fixed-mortgage and think rates are going to stay low or even go lower, you might want to look at switching to an adjustable rate mortgage.

Questions to Ask When Refinancing a Mortgage in Cambridge

Interest rates and amortization periods are important, but there is a lot more to consider when it comes to refinancing a mortgage if you live in Cambridge.

How Often Can I Refinance My Mortgage?

You can refinance a mortgage as often as you like. That said, different lenders have different guidelines but even that is often negotiable. There are costs associated with refinancing a mortgage, including switching costs and penalties for paying off a mortgage early. It’s quite possible that these penalties could eat up more than you were hoping to save. Ultimately, you may not need to refinance your mortgage every year but it’s still a good idea to, at the very least, review your mortgage annually.

Which Is Better: Refinancing or a Home Equity Loan

With terms like “refinancing,” “equity,” and “loan” being tossed around, it’s easy to think they are the same. But refinancing a mortgage and a home equity loan are very different.

Refinancing is a loan secured against the house. The existing mortgage is paid off and replaced with the refinanced one. The mortgage is paid in installments based on the terms and conditions you establish with the lender.

A home equity loan is often called a “second mortgage.” When you take out a second mortgage you borrow against the appraised value of the property, minus the outstanding balance of the primary, or first mortgage. A second mortgage does not replace the primary mortgage, it is in addition to it. It is a lump sum of money that you need to start paying back immediately. As a result, you end up having to pay two monthly mortgage payments.

A home equity line of credit (HELOC) meanwhile, is a revolving line of credit that lets you borrow against the equity you’ve built up in your home. You can use as much or as little as you like, and you only need to pay interest on the amount you use.

So, is it better to refinance a mortgage, take out a home equity loan, or consider a HELOC? It all depends on what your goals are. The mortgage refinancing experts at Canadalend.com can help you determine the best approach.

Canadalend.com, the Mortgage Refinancing Experts

If you’re thinking of refinancing your mortgage or its time to renew your mortgage, talk to the mortgage refinance experts at Canadalend.com. We’ll look at your current mortgage, your long term financial and lifestyle goals, and determine if refinancing your mortgage is the right path for you.

How can we get you better terms and rates with your mortgage refinancing than Canada’s big banks? Because the licensed mortgage professionals at Canadalend.com are independent, they have access to hundreds of different private lenders. Many even specialize is mortgage refinancing.

To find out what your mortgage financing options are, contact Canadalend.com today. Or apply online and a Canadalend.com lending specialist will help you set up an appointment for a free personal consultation at your earliest convenience.

IS IT DIFFICULT TO GET A HOME EQUITY LOAN in 2020?
A home equity loan is a great way to borrow against the equity you’ve built up in your home. Against the backdrop of a robust Canadian housing market and near record-low interest rates, it continues to be an excellent time for property owners to consider taking out a home equity loan.

Common Myths about Home Equity Loans
There are many misconceptions about what a home equity loan is and how it can be used.

Myth #1: A Home Equity Loan and Home Equity Line of Credit Are the Same
A home equity loan and home equity line of credit (HELOC) might sound alike, but they are very different financial products, even though they both use the equity you’ve built up in the property.

For starters, “home equity” is the difference between the value of your home and the remaining balance on the current mortgage—every time you make a mortgage payment, your home equity increases. Your home equity also increases as the value of your home increases.

A HELOC is a revolving line of credit that lets you borrow against the equity in your home. You can withdraw money when needed, and you only pay interest on the amount you borrow.

A home equity loan works like your primary mortgage and is sometimes referred to as a second mortgage. You receive a fixed amount that is payable over a predetermined period time with a fixed interest rate and set monthly payments. You start to pay interest on the entire amount as soon as you receive the home equity loan.

Myth #2: You Can Only Use a Home Equity Loan for Home Improvements
The money you secure for a home equity loan can be used for whatever you like. Many people take out a home equity loan for home improvements, but you could use the money to buy a second property, pay for a college education, consolidate debt, or anything else.

Myth #4: Approval Is Guaranteed
Just because you have a house does not mean you’re guaranteed to get a home equity loan. A lender might approve you for a certain amount, but they could back out of the home equity loan or renegotiate the terms after they take a closer look at your financial situation.

How Do You Get a Home Equity Loan?
The requirements for getting a home equity loan can vary depending on who the lender is. The bigger the lender (i.e. Canada’s big banks), the stricter the lending rules.

Canadalend Can Help You Get A Home Equity Loan Even If:

• - You are self-employed and cannot verify your income
• - Your credit history has weakened
• - You have taken on too much additional debt
• - The value of your house has dropped

Where there is a will, there is a way with Canadalend. We don’t let the small things get in the way of making sure you get the best mortgage product at the best price.

FAQ about Home Equity Loans

Q. Is It a Good Idea to Take Out a Home Equity Loan?
A. YES! There are many advantages to taking out a home equity loan. One of the most significant benefits is the lower interest rate. If you’re consolidating debt, credit cards can charge interest as high as 30%. A home equity loan will also have a lower interest rate compared to loans that are not backed up by the equity you’ve built up in your home.

Q. Can I Get a Home Equity Loan if I’m Unemployed or Have Unreliable Income?
A. YES! If you go to one of Canada’s big banks and ask for a home equity loan while unemployed or have unreliable income, chances are you’ll get turned down. Even if you are self-employed, the big banks can discriminate against you. But not at Canadalend. We specialize in working with the employed, self-employed, even client’s that are in-between jobs.

Q. Can I Get a Home Equity Loan with Bad Credit?
A. YES! Canadalend can help you.

We work with all incomes and credit scores to help secure home equity loans for our clients. There are many reasons why your credit can take a hit, and it’s not always your fault, but banks don’t care. Even if a traditional lender does offer you a home equity loan, they won’t be giving you their best rates.

The same thing applies if you have declared bankruptcy and want to take out a home equity loan. Traditional lenders see you as being a risk and could charge you a premium for a home equity loan, but not at Canadalend.

Q. Is it true that Canadalend has access to more lenders and more products than any bank or financial institution?
YES! Canadalend has access to private and alternative lenders, banks that specialize in providing home equity loans, and even caters to those who are self-employed, have unreliable income, or bad credit.

Private lenders do not have to follow the same strict lending guideless that Canada’s big banks and trust companies do. Unlike big banks, private lenders provide you with more freedom, flexibility, and options. At Canadalend.com, we have access to hundreds of different lenders. That means we can find you a lender that will provide a home equity loan.

It’s your equity, and you should be able to take out a home equity loan on your terms. If you’re a homeowner and are looking to take out a home equity loan, contact Canadalend.com today or apply online. A Canadalend.com lending specialist will help you set up an appointment for a free personal consultation at your earliest convenience.

Apply online in 60 seconds & get approved now!
Call us for more information 905-881-0242
Canadalend.com, Helping Homeowners Get a Home Equity Loan

Flipping houses is a popular real estate investment, where the investor buys the home with the goal of quickly reselling it for profit. Often, they make improvements to the property to maximize its value.

Flipping houses in the GTA real estate market can be a smart investment and a positive experience if the investor knows what they’re doing. The biggest aspect that many don’t consider are the tax implications that come with flipping a property.

How to Flip a House

There are different ways that one can go about this. Some prefer to hold onto the mortgage for the shortest amount of time possible by flipping them as soon as the market heats up. They might not maximize value but they should yield a profit.

Other investors play the longer game where they invest in the property through renovations and improvements. This can result in a greater return on investment but it means the investor will be responsible for the mortgage for longer, and must finance the renovations. A greater financial commitment can lead to a much greater reward.

What’s the Risk?

There is risk with any investment. Each property comes with some problems, which could affect how quickly the house can be sold. In addition, markets fluctuate fast and if it happens to cool before an investor can resell the property they could have to financially carry it for longer. This could reduce the profit margin.

Any unexpected delays in renovations or construction could also result in less profit.

Restrictions and Tax Implications

When the GTA market heats up, one suggestion to cool the rising prices is to tax house flippers. This would impede speculative purchases and allow more residents to buy a home. Restrictions and tax implications could hinder some investment opportunities, but in conjunction with the new mortgage rules could protect borrowers, lenders and investors.

Another idea being considered is a graduated tax system. This means that an owner who buys and sells a home shortly after purchase would pay a higher tax rate.

These ideas do come with the contrarian viewpoint that it would take value and money out of the market, driving down the price of homes.

Flipping a home isn’t for everyone, but savvy investors who understand a specific market could yield a huge return.

Making the leap from lifelong renter to homeowner is exciting but it can also be stressful and time-consuming.  Homeownership comes with a ton of responsibility but it results in finally having a place to call your own. A place where you can settle, make all the choices and plant roots.

Here are some tips to help make the transition from renter to owner as smooth as possible.

Create a Detailed Budget

Entering homeownership for the first time is expensive and a big financial change for most. You need to know where your money is going every month. Create a detailed budget where you outline every monthly cost and be sure to leave some room for those pesky costs that pop up every month.

Your budget will guide most of your monthly spending. The more detail you include, the less chance you have of being surprised. If you come under budget some months you can consider making a larger mortgage payment, which will go towards the principal.

Learn to be Handy

Renting can be nice and breezy. When your faucet breaks, you call your landlord and they call the plumber. When you have an electrical problem, you call your landlord and they call the electrician.

Owning a home means being responsible for every broken appliance, leaky faucet and every part of a home that requires maintenance. Learning to be handy and being able to make small repairs can save an owner a lot of money and get your home running at optimal capacity quicker.

There are a ton of DIY classes people can take to improve their skills and knowledge. Home Depot and community centres tend to offer these classes in the GTA.

Do not Overlook…

An important tip for homeowners is to stay organized. If you are upgrading the size of your home, you will have more space so use it wisely. This doesn’t mean acquiring more stuff, but instead, make sure you keep your storage spaces organized and don’t let your garage devolve into a room full of tools and boxes of old clothes.

There might not be a bigger lifestyle change than the one that comes with becoming a homeowner for the first time. Go into the situation with a plan and do your best to execute that plan every month to ensure the transition works and to minimize stress.