If you’re struggling to make mortgage payments or simply need cash, mortgage refinancing can be a great option to take advantage of. Refinancing a mortgage involves taking a new loan to settle an old one. There are several reasons why homeowners opt for mortgage refinancing in Ontario:

• To obtain a lower interest rate;
• To shorten the term of their mortgage;
• To convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, or vice versa;
• To leverage a home’s equity in order to finance a large purchase or to consolidate debt.

Mortgage Refinancing in Ontario

Mortgage refinancing refers to paying off an existing home loan by replacing it with a new debt obligation under better terms. With mortgage refinancing Ontario, borrowers can get money to settle the original mortgage. Refinancing allows you to swap from your old loan into a new loan with an objective of achieving your financial needs.

Some may confuse a second mortgage with mortgage refinancing, but they are different. A second mortgage doesn’t replace your first mortgage but instead gives you money depending on your home’s equity amount. On the other hand, mortgage refinancing replaces your first loan and gives you an entirely new mortgage.

Should I Refinance My Mortgage?

If the interest rates drop significantly after taking out your first mortgage, refinancing is an excellent strategy of lowering your monthly payments. But first, it’s wise to calculate if the amount of money you will save is worth the money you’ll pay as fees.

Before setting out for a mortgage refinancing Ontario, there are some few things you need to put into consideration. For instance, your property’s current value, monthly income, and credit history play a significant role in determining if you qualify for the refinance.

In some cases, lenders may even go ahead to calculate your loan-to-value (LTV) ratio. If your LTV ratio falls below 80%, chances are higher that you can refinance your mortgage.

7 Reasons to Consider Mortgage Refinancing in Ontario

• Lower Interest Rates: With mortgage refinancing Ontario, you can get a new home loan at a better interest rate.

• Reduced Monthly Obligations: Refinancing can help you reduce your monthly expenses due to lowered monthly payments.

• Debt Consolidation: With the help of home refinancing Ontario, you can pay off other outstanding debts, especially those that have high-interests.

• Adjustable Repayment Plan: Refinancing your home mortgage can help you reduce or increase your loan term length and payments.

• Accessible Home Equity: By refinancing, you can cash out up to 80% of your home equity and use the funds to renovate your home or to pay for college fees.

• Improved Cash Flow and Savings: By lowering your monthly debt payments, refinancing can improve your cash flow and help you save some money.

• Flexible Mortgage Rates: To refinance mortgage Ontario successfully, you can switch between fixed-rate mortgages and variable-rate mortgages depending on the prevailing interest rates.

Ways of Refinancing Your Mortgage in Ontario

When it comes to home refinancing Ontario, there are numerous options available that are worth considering. Depending on your financial status and needs, you ought to pick the most suitable method. Here are some of the ways of refinancing your mortgage.

• Using a Home Equity Line of Credit (HELOC)

Being a popular financial tool for refinancing, a HELOC can grant you access to your home’s equity based on your discretion. You can cash out up to 80% of the equity in your home with this mortgaging strategy.

• Breaking Your Mortgage Contract

If the current mortgage terms no longer suit your financial needs, consider breaking and replacing it with a new one. You can implement this strategy when the interest rates have dropped or when your financial status has changed.

• Blending and Extending an Existing Mortgage

To refinance mortgage Ontario, some lenders may offer you an opportunity to extend your mortgage term length before your loan term elapses. Your old mortgage rate is blended with the new mortgage rate. With this option, you don’t have to pay the prepayment penalty.

Costs of Home Refinancing Ontario

The cost to refinance mortgage Ontario varies depending on each lender. Regardless of the strategy of refinancing a mortgage, your new lender will require you to pay some fees. Such costs are legal and play a vital role in processing the refinance application.

For instance, when buying a new home, you are required to pay for the closing costs upon completion of the deal. Now, when refinancing your mortgage, you must pay the closing costs again. Generally, closing costs always cover several fees.

In a nutshell, here are some of the closing costs you are likely to incur when refinancing your home mortgage in Ontario.

• Application Fees: Cover administrative costs and credit check expenses. The fees are useful in processing the loan request.

• Loan Origination Fees: The amount you pay once your loan request is approved. Lenders charge this fee to cater for the costs they incur in evaluating and preparing your loan.

• Attorney’s Review Fees: The amount of money that the lawyer or company, who closes the deal, charge. The attorneys representing the stakeholders conduct the settlements.

• Other Possible Fees: Include title policy, loan points, escrow fees, beneficiary demand, underwriting, appraisal, wire, tax service, notary, and recording fees.

How to Choose a Mortgage Refinancing Provider in Ontario?

Most homeowners refinance mortgage Ontario to take advantage of the lowered interest rates. However, finding the right mortgage refinancing provider goes beyond getting better interest rates.

Besides searching for a mortgage refinancing lender with the best rate, you should also consider other factors such as the closing costs. The following tips will guide you on how to find the best mortgage refinancing provider in Ontario.

• Compare the rates of several mortgage refinancing providers to get the best offers
• Know all the mortgage refinancing lenders before making a choice. Such lending institutions include credit unions, mortgage bankers, and correspondent lenders
• Gather much information regarding different mortgage refinancing providers by reading each of their reviews online
• Consult mortgage experts, family members, and friends to help you pinpoint the best mortgage refinancing provider

Final Word

Mortgage refinancing Ontario is ideal for you as long as you’ll benefit from the new home loan. Before applying for a mortgage refinance, evaluate your financial goals and find out if the refinance plan will fulfill your future home needs. Mortgage refinancing Ontario can improve your financial status especially when you get better rates and proper repayment term lengths.