Mortgage Refinancing

Refinancing your Mortgage

Mortgage financing

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Your mortgage is not set in stone for the period of its term. You might want to switch lenders to get a better rate or different mortgage or renegotiate with your current lender. Another lender may have better rates or payment options. Refinancing essentially means paying off your current mortgage and establishing a new mortgage with either a new lender or your current lender. I can help you negotiate with your current lender or switch to a new one.

You are in effect registering a new mortgage with a new appraisal, survey and legal costs. In theory you need to pay these over again although in practice lenders might offer incentives to help you switch. It is a competitive market after all. There are many reasons why you might want to refinance, or increase, your existing mortgage – to consolidate non-mortgage debt. to finance improvements to your home, etc. Let me help you negotiate with your existing lender or switch to a new lender who will give you a more favourable rate.

Switching a Mortgage

What happens legally when you switch?

Most people are unaware of the legal effect of switching lenders. When you renew a mortgage you are essentially starting the process again – discharging the existing mortgage, taking out a new one, and beginning the whole payment process, albeit at a lower principal amount. As such, you should treat this as just as important a process as the first time you arranged the mortgage. Remember your situation will most likely have changed since then, and you will likely require a different product with different terms attached to suit your current situation.

In most provinces a switch of the current or lower balance requires only a simple assignment of interest in the mortgage to be executed by all parties and registered on title. This assignment also attaches the specific terms that will have legal effect and replaces those of the transferring institution. So even though the old mortgage is still registered on title, all those old terms and conditions registered by your previous lender will be completely replaced by those of your new lender under the assignment of interest.

Moreover, the form that you are holding in your hand from the lender who did your previous mortgage financing, has a rate that probably is not as competitive as it could be. Don’t let the hassle from the first time you negotiated dictate you just signing the form and sending it back to the lender – it will most probably cost you in the form of higher rates.

Equity Line of Credit

Refinancing your Mortgage

Need some flexibility?

An equity mortgage is a mortgage based on the amount of equity in your home (the net amount left after deducting the mortgage from the home’s value). Usually lenders will lend up to 75% (in some cases only 65%) of the value of your property. If you have good credit you will typically qualify for a fully discounted interest rate. If you have some credit issues the lender will charge you a higher interest rate to mitigate the risk.

Essentially, an equity mortgage is a second mortgage or a collateral mortgage to a demand loan that allows you access to the equity built up in your home, either in a lump sum or a line of credit.

If you just want a small line of credit ($5,000-$10,000) most lenders will lend it to you without the cost of having to have a mortgage arranged and registered.

Please contact me for further details on our equity mortgage products.

Second Mortgage

A second mortgage can be used to reduce your monthly debt payments, make home improvements or free up cash for whatever you want. Like a home equity loan or others of its type, the lender requires it to be secured by a second mortgage lien.

Because the lender is at a higher risk in case of default (since they will not receive any money from the sale of the house until the first lender is paid, and if there is no money left over, they would lose their money), the interest rates are higher.

You can also use a second mortgage for consolidating high-interest credit card debts by reducing your rates and payments and converting compound interest into simple interest.