Refinancing makes sense when you want to borrow additional funds, at a lower interest rate compared to other types of unsecured credit or are considering switching between a mortgage and Home Equity Line. You can do this even if you have a mortgage elsewhere.
If you’ve got a goal in mind, let me help you determine if refinancing is the best approach for you. Below, are some of the most common reasons why homeowners choose to refinance. Tell us about your plans and we’ll help make the most of your opportunity.
Reasons to Refinance
- Consolidate higher interest debts into one manageable payment with a more affordable interest rate compared to other types of unsecured credit.
- Complete home improvement projects
- Fund tuition for yourself or a family member
- Purchase a vehicle or recreational property
- Take advantage of investment opportunities
If you’re considering refinancing, speak to me today and start putting a plan in place.
Whatever your reasons for wanting to refinance your mortgage, I will take a look at your current home equity and your goals for the future to recommend the best solution. Depending on your situation, here are a few of the refinancing solutions that may be available to you:
- Mortgage Add–On With the Mortgage Add-On option you can borrow up to 80% of the appraised value of your home, minus the remaining mortgage balance.
- Equity Homeline Plan If you have 20% or more equity in your home the Homeline Plan is a smart and easy way to manage all your borrowing needs under one simple, flexible plan.
- Secured Line of Credit You can fully secure a Line with a registered collateral mortgage on your principal residence. With a secured credit line, we can offer you a lower interest rate than we could with a regular, unsecured line of credit.
Thinking about refinancing, prepaying a large amount or renegotiating your current mortgage to take advantage of lower interest rates? Before you do, there are several things to keep in mind—the most important one being whether or not you will have to pay the mortgage pre-payment charge.
What is a Mortgage Pre–payment Charge?
The purpose of a prepayment charge is to compensate the lender for the economic costs it incurs when a prepayment amount exceeds the prepayment privileges permitted under the mortgage.
How is the prepayment charge for a Closed Variable Rate or RateCapper Mortgage calculated?
The prepayment charge is 3 months’ interest on the amount prepaid using the
- The Interest Rate if you have a Variable Rate mortgage
- The RateCapper maximum rate if you have a RateCapper mortgage
How is the prepayment charge for a closed fixed rate mortgage calculated?
The prepayment charge for a fixed-rate mortgage is the greater of
- three months’ interest on the amount prepaid at the interest rate; or
- interest for the remainder of the term on the amount prepaid, calculated using the “interest rate differential” (IRD).
The interest rate differential is the difference between the interest rate and our posted rate on the prepayment date for a mortgage with a term similar to the time remaining in the term and having the same prepayment options as the mortgage less your rate reduction.
In completing this calculation one of the components used is a financial concept called “present value”. This concept recognizes that interest income to be received in the future is less valuable
than the same amount of money received today. The interest rate differential calculation also takes into account the fact the mortgage balance for the remaining term declines on each payment date. The use of these financial concepts in the calculation reduces the amount calculated using the interest rate differential.
What’s Right for You?
The best way to know whether you can still save money in the long run after paying the mortgage pre-payment charge is to call your current lender and find out the pre-payment penalty.