Refinance Mortgages
Refinancing mortgages are a form of financing that helps homeowners pay off their previous mortgage in full by acquiring a new loan. This new mortgage can have a new set of terms as well as a different interest rate than the previous one.
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If you are facing difficulties with your current mortgage or trying to consolidate debt, a refinance mortgage is a good solution for you.
If you are wondering how to refinance your mortgage in Canada, here is everything you need to know to get started.
What is Mortgage Refinancing and why Should You Do It?
To refinance your mortgage you need to break your current loan and opt for a new mortgage with a lender of your choice. You can stick with your current lender if you want to. One downside of mortgage refinancing is the prepayment penalties borrowers face due to breaking their mortgages early on.
Refinancing a mortgage in Canada isn’t your only option. Sometimes other mortgages, such as a second mortgage or HELOC, can be a better solution for you. Some common reasons to refinance mortgages are:
1. Lower Interest Rates – Refinancing mortgages can often help borrowers with their interest rates. Depending on the prepayment penalty and the size of your outstanding mortgage, refinancing can save you a lot of money.
2. Tap Into Your Equity – You may be able to access the equity in your house by refinancing your mortgage. People can borrow up to 80% of their home’s appraised value. This money can be put aside to
- Fund investments
- Construct, renovate or improve your real estate
- Fund personal and professional expenses
- Cover the costs of a life situation such as the death of a loved one
- Invest in other property or ventures
Breaking your mortgage, taking up a home equity line of credit (HELOC), or mixing and extending your mortgage with your present lender are all options for borrowers tapping into their equity.
3. Refinancing Debt – Debt consolidation via refinanced mortgages is a common solution in Canada. If you have any outstanding obligations, such as credit card bills and small loans, you may be able to combine them using one of the many refinance mortgage solutions available.
If you can relate to these scenarios, you've come to the right place! With Freedom Capital, our borrowers receive custom-tailored commercial financing solutions and quick approvals.
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Refinancing a Mortgage with Bad Credit in Canada
It can be hard to refinance your mortgage with a bad credit score. However, it is not impossible. Certain lenders in Canada offer mortgage solutions specifically for borrowers with bad credit. They offer reasonable requirements, swift application procedures and feasible income qualifications.
If you are looking to refinance a second mortgage with bad credit, Freedom Capital is a great mortgage brokerage for you. We can provide mortgage approvals in as little as 24 hours* with custom solutions tailored to your needs.
FAQ
When refinancing a mortgage in Canada you may face:
- Mortgage registration fees
- If you switch to a new lender you will need to pay mortgage discharge fees
- Legal fees for a lawyer
- Appraisal fees
- Payment penalties for your mortgage, such as IRD.
Borrowers renew a mortgage to re-sign with their current lender. While renewing a mortgage, borrowers typically opt for the same mortgage terms and interest rate as their current mortgage.
When you refinance a mortgage you break your current mortgage in favour of a new mortgage with different mortgage terms and interest rates.
To make things simple; you renew a mortgage when you want to extend your current mortgage with the same lender but you refinance a mortgage when you are looking for new mortgage terms with a different lender.
To refinance mortgages with a home equity line of credit borrowers need to simply take out a HELOC and then get approved for mortgage refinancing from their lender. Whether or not you get approved for mortgage financing with a HELOC solely depends on your lender, income and credit.
