There are many good reason why you may wish to refinance, or increase, your existing mortgage. Here are some possible reasons and what you need to know about each:
Consolidate other debt
Most unsecured debt is priced by your bank at a higher rate than your mortgage in order to compensate them for the higher risk of loss if you default. For many people it only makes sense to use available home equity to pay out this debt, as it typically reduces interest costs significantly. If the total of the existing mortgage and the debt to be refinanced is less than 80% of the value of your home, and you qualify in terms of income and credit standing, you should typically be able to refinance your first mortgage.
Renovations and home improvements
If you want to spend a significant amount of money on improving your home, you may be able to take out a lot more equity than you realize! We can advise you through this process. All three insurers – CMHC, Genworth, and AIG will insure new mortgages which are “topped up” for this purpose, when the total of your current mortgage and the new funds exceeds 80% of the current home value. Not all improvements are eligible, however. Pools and spas are typical “over-improvements” which may not qualify for a high-ratio equity take-out. Of course, if the total requirement is less than 80% of your home’s current value, you should have little trouble getting the “top up” you need – regardless of the degree of luxury you plan to add.
Take advantage of today’s low rates
Many people are refinancing their homes to take advantage of today’s historically low interest rates. If you are currently in a fixed rate, closed product, there will likely be a penalty to pay out your mortgage early. In some cases these penalties can be extremely high, due to the “fine print” in your mortgage commitment. An Ingram Mortgage Team professional will be able to analyze your situation and help you decide whether it will be worth it for you in the long run to pay this penalty.
Home equity / Line of Credit
Securing a loan against the existing equity in your home for home renovations, a vacation, a new car, or your dream vacation home, is a very popular option. Refinancing, whether it be a relatively straightforward refinance of your existing mortgage balance, or utilizing your home equity for any other purpose desired, is a strategic financial decision that requires the assistance of a mortgage expert to get you the best deal from the hundreds of options available. Whether you want to:
- lower your monthly payment
- consolidate debt
- make home renovations
- pull cash out of your home
- increase your flexibility with a credit line
- break your mortgage
My wife and I were struggling with credit card debt. We were making our payments, but we weren’t making any progress. We went to the bank we had our mortgage with and they told us they couldn’t do anything for us. I spoke to Jeff about our problem and he was able to use the equity in our mortgage through a refinance and he got us a rate that was much better than what any of the banks were offering. Now, we are able to focus our money where we want it and are saving hundreds in interest, all thanks to the IMT.