Mortgage Refinancing

According to today’s lending rules, you are able to refinance your mortgage up to a maximum of 80% of the value of your property.  This means you will take the equity out of your existing house, and use those funds to pay for different things. People refinance their home for different reasons.  But the main reasons why people refinance their home is to: 

1. Consolidate debt
2. Renovate their home
3. Invest
4. Get a better interest rate

Always find out

• Find out the penalty amount to break your mortgage before maturity date. (eg. IRD or 3 months interest?)
• Will you pay the penalty with cash, or will you roll it into the new mortgage?
• What is my pre-payment options?
• What are the penalty clauses on the new mortgage?

Refinance by using your existing equity to consolidate debt

• Calculate the total amount of debt you need to pay off
• What are all the penalties involved to pay off that debt?
• Find out how much will I be saving each month if I consolidate all my debt?

Are there any extra costs involved in addition to the penalty?

• Legal fees
• Discharge fee
• Appraisal fee

What figures should I compare BEFORE and AFTER my refinance? 

• Principal balance – What will be your new balance at maturity?
• Monthly Mortgage Payments – Every penny you save each month COUNTS!
• Interest to Maturity- How much money will you be throwing away on interest if you don’t switch?