Owning a home today is certainly not an easy task. Most people either have taken a mortgage or a few of them still end up paying rent. In situations like these, it is imperative to save money, and one way you can save money while repaying your mortgage is through refinancing. A mortgage refinance is when you pay off an existing mortgage loan and replace it with a new one, either with the same lender or a new one. There are various reasons to refinance your mortgage; it can be to consolidate your debts, get a lower interest rate, or even access the equity in your property. Through this blog that our team at Brampton Mortgage Broker has put together for you, we will explore ways in which you can save more money with a Mortgage Refinance in Brampton.
Mortgage refinance can also be tricky as replacing your old mortgage with a new mortgage early on can lead to the loan applicant incurring hefty pre-payment penalties. It is essential to do your necessary research before you decide to refinance an to check with your current mortgage lender to know what the cost will be to you if you were to break and pay off your mortgage before starting an application for a mortgage refinance.
In today’s real estate market, where the interest rates are low, refinancing your mortgage almost always ensures you save money and give homeowners the chance to access the equity they have built up in their homes. Before applying for refinancing, you must understand how mortgages works, how it will impact your credit score, and what will the best possible outcome. Canada has embraced mortgage refinance for quite some time now, with cities like Brampton and others offering low mortgage rates to help individuals get their dream home sooner rather than later; Below-mentioned is reasons why refinancing your mortgage is a fantastic idea:
- You can get a lower rate of interest
Refinancing your mortgages allows the applicant to get a lower rate of interest on the mortgage, making them save a significant amount of money over time. It also depends on the size of your current mortgage and if you have any outstanding pre-payment penalties.
- Easy access to a substantial amount of funds
Mortgage refinance allows homeowners to access up to 80% of their property’s value, deducting any outstanding debts. This gives them the opportunity to invest the money saved on home renovations, children’s post-secondary education, and other various investment opportunities.
- Debt consolidation
If your home has substantial equity, you can use that equity built up to pay off high-interest debts through mortgage refinance. For example, if you have a car loan, a student loan, or outstanding credit card bills due, you can consolidate all this debt into one single payment through a mortgage refinance.
Advantages and disadvantages of mortgage refinance:
You are making a wise decision and a major financial decision when you get in touch with a mortgage broker. A mortgage broker will educate and advise you on the best mortgage options and find the perfect solution to suit your mortgage needs. Our team of mortgage brokers at Brampton Mortgage Broker has saved thousands of dollars for our clients. In addition to mortgage refinance is a good option, there are also some risks involved that you should be wary of, and we have outlined them down below.
- You can get lower interest rates.
- You can consolidate your debts.
- Allows you to access the equity in your house.
- It gives you the option to swap to a variable or fixed rate.
- You could end up saving a lot of money over time.
- Pre-penalty is high for outstanding and late payments.
- When you access your home’s equity, your debt increases too.
- The switching rate does not work in your favour always.
- When you consolidate your debt, it takes away the incentive of paying the loan off much quicker.
How to refinance your mortgage in Brampton?
Now that we are aware of the benefits and risks involved in refinancing your mortgage, let us guide you step-by-step through the process of how you can refinance your mortgage in Brampton.
- Determine whether you need to apply for refinance
Refinancing your mortgage is a long-term commitment. Before approaching a lender, you must identify if there is a legitimate enough reason for you to apply for one. Below-mentioned is some of the reasons:
- Home renovations
- Children’s education
- Debt consolidation
- Capital required to start a new business opportunity
- Identify if this is your best option
Even though it may sound very attractive to applicants that a mortgage refinance offers lower interest rates, you have to ensure you thoroughly evaluate your options before applying for one. Detailed research with the help of a reputable mortgage broker like our own Rumy Gill, who will help you make a well-informed decision.
- Capability to pay back the loan amount
Ask yourself these questions before applying for a refinance:
- Can you afford to pay the monthly repayments?
- How much money do I need to borrow?
- How quickly do I need the money?
- Will the interest rate be a stumbling block for me in paying off the loan?
- Know your credit score
Your credit score determines whether you get approved for refinancing or not. Mortgage lenders need to know how competent you are with handling your finances, including making the monthly repayments. If your credit score is poor, the chances of you getting a refinance on your mortgage is slim to none. A pro tip – try improving your credit score before applying for refinancing.
Costs to be considered while refinancing your mortgage:
- Closing costs and fees: Before your new mortgage can be finalized, you need to pay off various refinancing costs such as closing costs and expenses like home inspections etc.
- Higher fees paid on lower interest rates: If you want to get the lowest interest rates on your mortgage to refinance, you will need to fork out cash to lock in your loan from your own pocket.
- Pre-payment penalties: It is imperative to understand the terms and conditions of the refinance before closing. If you choose to lower your balance early, you will end up paying a hefty penalty.
If you want to refinance your mortgage in Brampton, look no further than our team at Brampton Mortgage Broker. Our team of mortgage brokers have the mortgage experience you are looking for a well-rounded opinion on mortgage refinancing. Make sure to contact us Today