If you are a Brampton homeowner who is looking to save some money on your mortgage or perhaps you are looking to borrow additional money at a low rate of interest to consolidate your high interest debts, then refinancing your mortgage may be a good option for you. Currently interest rates are very low, but they won’t last as the Bank of Canada has started to raise them and there is indication that rate will continue to rise. So, if you are thinking about making this move to refinance your mortgage for any reason, then acting as soon as possible is what you will need to do.
But if you are unfamiliar with what mortgage refinancing is, well gladly help get a full grasp of what it is. Our team at Brampton Mortgage Broker has put this brief article piece together to give a quick overview and understanding of mortgage refinancing. If you have any questions after reading through the brief article, you always get in touch with one of our team members and we will gladly help you understand if mortgage refinancing is a fit for you and your current situation. So, now let’s get into the article below.
What is refinancing?
Refinancing your mortgage means that you are cancelling your current mortgage and replacing it with another one. So, if you were to break your mortgage before the maturity date (the date your mortgage comes up for renewal) then you will be responsible for the financial penalty that will result. However, if you were to wait until the maturity date (the date your mortgage comes up for renewal) then you will not occur this penalty cost.
With that being said, even if you have to break your current mortgage early to refinance often at times will result in immediate savings. For our clients, we have found that the amount of money that you will save by refinancing your mortgage far outweighs any penalties that you will have to pay. Thus leading our client to opt to refinancing their mortgage.
When should I consider refinancing?
The simple answer to this question is that you should consider refinancing whenever doing so will save you money. And there are a number of scenarios when this will be the case, and we will go over a few of them below:
Interest rates have gone down:
If interest rates have gone down since you last renewed your mortgage, then refinancing could save you considerable money over the amortization period of your mortgage. This rate change can be anywhere from 0.5% to a full 1% or even some cases 2% or more decrease in the mortgage rate you currently have.
We have helped many clients over the years cut down their interest rates by almost half of what it was before we have completed their refinancing. We have help clients with high interest rate of 6% or higher bring their mortgage rates down to a low manageable rate of 2% to 3% and some cases even lower. We recommend that you contact us to see how much interest rate we can get for your mortgage refinancing given your situation.
Interest rates have gone down:
If interest rates have gone down since you last renewed your mortgage, then refinancing could save you considerable money over the amortization period of your mortgage. This rate change can be anywhere from 0.5% to a full 1% or even some cases 2% or more decrease in the mortgage rate you currently have.
We have helped many clients over the years cut down their interest rates by almost half of what it was before we have completed their refinancing. We have help clients with high interest rate of 6% or higher bring their mortgage rates down to a low manageable rate of 2% to 3% and some cases even lower. We recommend that you contact us to see how much interest rate we can get for your mortgage refinancing given your situation.
You have improved your credit:
Another scenario where it might make sense to refinance is if your currently have a bad credit mortgage but have improved your credit to the point where you can qualify for a traditional mortgage. Since you can save a considerable amount of interest by making the switch, it may make sense for you to make the switch early by refinancing. So, keeping your credit score in check is a must, but if you are unsure how manage or even fix your credit score, you can rely on our team to help you out.
We have helped many clients, year after year ditch their bad credit mortgage for a traditional mortgage, this all comes down to understanding what caused our client to have bad credit in the first place. When we work with clients our team works to understand the main reason for the bad credit and then we go to work to put in a plan to help with resolving the issue. We recommend that you contact us to see how we can help you with improving your credit score so we can help get you a mortgage that is more in line with a traditional mortgage.
You want to consolidate your debt:
If you have high interest consumer debt, refinancing can be used as a means to consolidate your debt. In this case, the new mortgage that you get through refinancing would be for the amount of your current mortgage plus the amount of consumer debt that you want to consolidate (most lenders allow you to borrow up to 80% of your home equity when you refinance).
The additional money that you borrow in your refinance is given to you in cash so that you can pay off your other debts. Because mortgage interest is typically much lower than interest on other unsecured debts, you could end up saving hundreds or even thousands of dollars in consumer interest charges as well as be able to pay off your debt much faster.
Our team has helped many clients with consolidating their debts into their mortgage, with a simple refinance. We can help you eliminating your high interest debts and help you save money right away by lowering the overall interest you are paying on your debt with one low interest rate. This means our team can help you trade the high interest rates on your credit cards, loans, lines of credit, car payments, or any debts you are paying and make one low affordable payment. Our mortgage refinance process for consolidating your credit is an easy one and will help you save hundreds and thousands of dollars a month.
You want to borrow money:
Another reason why you might want to refinance your mortgage is to borrow money. Since refinancing allows you to borrow from your home equity at a much better rate than a credit card or other type of loans, it could be a good option when you are in need of money to finance a large expense such as a home renovation, or a business investment.
Depending on the amount of money you are looking for, our team can help design a mortgage refinance that works in your favour. We help clients on a regular basis get the money they nee from their home as easy and quick as possible. Make sure to contact our team today to see how we can help you with getting you the money you need.
How do I know if refinancing is right for me?
Although refinancing your mortgage has many advantages, it may not always be the right choice. You need to ensure that the amount of money you save will be more than the amount that you’ll have to spend on any financial penalties. A good rule of thumb is that the closer you get to your renewal date, the more likely refinancing will be a good choice. To know for certain however, you should consult with our Brampton Mortgage Broker who can run the appropriate calculations for you, and help you make sense of your finances.
If you would like to learn more about refinancing your mortgage and whether it is right for you, contact me today to schedule an appointment!