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Mortgages

Refinancing

Refinancing is any time that you change your mortgage during the current term of the mortgage. You may change the mortgage for a lower interest rate or the amount of the mortgage. Some people will take advantage of a low mortgage interest rate and increase their mortgage to pay off debt that they have that is at a high interest level. Refinancing can make sense when you look at the overall financial picture to see if it would benefit you to make the change. When you do decide to refinance and break your current mortgage term, you will end up having to pay a mortgage penalty. The mortgage penalty will either be three months interest or IRD (Interest Rate Differential) whichever one is greater on a fixed rate mortgage. If you have a variable rate mortgage you will only have to pay the 3 months interest penalty. If you have an open mortgage you will not have any penalty to pay but your interest rate will typically be higher than that of a closed variable or fixed interest rate.

When making the decision on whether to refinance it is best to talk to your mortgage broker about it and review your entire situation, current and future goals with them. Your mortgage broker can do an Annual Review and look at any cost savings after factoring in the amount of the mortgage penalty. You could potentially save thousands of dollars or it may be worth it to wait till the end of your term. Your mortgage broker will be able to go into detail with their calculations and provide you with a report detailing the results so you can make the best decision that is right for you based on accurate information and your goals.

Some more refinancing information:

Refinancing Process

  • Figure out if this is a refinance or mortgage transfer
    • A refinance is defined as increasing the size of the mortgage
    • A mortgage transfer is moving the mortgage to another lender without altering the size of the current mortgage
  • Contact your broker
    • Complete online application
    • Discussion what options best suit your needs
    • Get pre-approved and obtain a rate hold (if selecting a fixed rate)
  • Review existing liabilities
    • Strongly consider adding any existing liabilities to the mortgage if your interest rate is higher on the liabilities
  • Provide needed documentation
  • Instruction process
    • The lawyer or lender will contact you to arrange a time to sign final mortgage documents
    • We will provide a trusted lawyer contact if you do not have one

Mortgage Transfer Process

A mortgage transfer is when you move your current mortgage to from one bank or lender to another . When transfer you mortgage to another lender or bank you are doing it without changing the amount of the current mortgage or the length. If you change the amount or the length of the mortgage it would be a refinance of your mortgage. For example: You have a mortgage that is $200,000 at Bank A and you want to do a mortgage transfer to Bank B. The mortgage would still be for $200,000. If you wanted to change your mortgage from $200,000 to $250,000 then it would be a mortgage refinance because you are change the mortgage amount and not just doing a mortgage transfer from one bank to another.

  • Figure out if this is a refinance or mortgage transfer
    • A refinance is defined as increasing the size of the mortgage
    • A mortgage transfer is moving the mortgage to another lender without altering the size of the current mortgage
  • Contact your broker
    • Complete online application
    • Discussion what options best suit your needs
    • Get pre-approved and obtain a rate hold (if selecting a fixed rate)
  • Are you breaking an existing contract (term)?
    • Refinancing early is simply a numbers game, sometimes it works and sometimes it doesn’t. To figure this out, we need to know the following:
      • Original mortgage amount?
      • Current lender?
      • Remaining term/ amortization?
      • Current value of your property?
      • What your penalty is from the current lender to pay out early?
  • Review existing liabilities
    • Strongly consider adding any existing liabilities to the mortgage if your interest rate is higher on the liabilities
  • Provide documentation
  • Instruction process
    • The solicitor or lender will contact you to arrange a time to sign final docs
    • We will provide a trusted solicitor contact if required

Why use a mortgage broker?

YOUR lending institution will only advise you on their own product. You could visit every institution out there, one by one if you had time......

Or, you can talk to talk to a mortgage broker who will shop for the best mortgage for you from all available lenders including many you would not usually think of on your own. 

 

Are there fees for your services?

NO! There are no fees on conventional mortgages as we receive payment for placing the mortgage from the financial institutions, however, in some circumstances lender/broker fees may apply.

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